Mexican energy reforms clear final hurdle of state approval

|By:, SA News Editor

Mexico’s sweeping energy reform clears its final major hurdle, as San Luis Potosi becomes the 17th state legislature to give rapid-fire approval to constitutional changes that will allow foreign investment into what has been a 75-year-old state monopoly.

An influx of Mexican oil would contribute to a glut that is expected to lower the price of Brent crude, which has averaged $108.62/bbl YTD, to as low as $88/bbl in 2017; Exxon's recent prediction that North American production would vault ahead of every OPEC member except Saudi Arabia doesn’t even take into account any changes in Mexico.

Although the first Mexican opportunities may go to the major independent oil companies in the U.S. and Europe, Chinese groups such as Cnooc (CEO) and Sinopec (SNP) will actively seek opportunities; Mexico's president plans to visit Beijing in 2014 and his trip may reveal whether Chinese firms are acceptable partners.

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