Seeking Alpha

Mexico proposes major energy reforms

  • Mexico is set to end a seven-decade state oil monopoly and open the door to greater involvement by foreign companies, but it remains to be seen if the plan is liberal enough to attract the likes of BP, Exxon (XOM) or Chevron (CVX).
  • It's not privatization: Mexico (EWW) will keep ownership of reserves and share profits with oil companies that find and produce the oil - a big change from the past, where Pemex only paid companies a fee for contract work, but it falls short of sharing the oil itself, which many oil companies wanted.
  • The country clearly needs reform; it sits on a reserve the size of Kuwait yet is a net importer from chronic lack of investment.
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