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Mexico’s Energy Reform

6/23/2014 Lewis Adams
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Mexico’s Energy Reform 

The Mexican oil and gas industry has a history rooted in the nation’s identity, but step-change for the landscape is now underway. During the last 20 years, declining production, political stagnation, globalization of consumption, and an underperforming economy have contributed to inevitable change.

This shift has encouraged cautious optimism in Mexico’s economic transformation. The kick-start from the energy reform has the potential to spur meaningful economic growth, drawing focus to global talent implications and leadership needs for the future.

The oil and gas industry has a pivotal place in Mexican history. Early expropriation led to the development and creation of the public company, Petróleos Mexicanos (PEMEX), which currently has operational jurisdiction over hydrocarbon reserves throughout the country. For the past 70 years, PEMEX has grown to become the economic lynchpin for the state. According to INEGI and the SHCP, Pemex represents roughly 7.7% of Mexico’s GDP, 16% of exterior commerce, and 35% of the public sector income. Pemex has production at roughly 2.5 million barrels per day, which has declined from a peak of more than 3.4 million barrels per day in 2004.

A 2012 change in government provided the catalyst that led to the well-publicized constitutional energy reform – approved in late 2013 – and opens the door to private sector participation in the oil and gas sector. While secondary legislation is still to be defined, many local and international businesses are considering how to take advantage of the potential opportunities.

Lewis Adams Partner +52 55 91380370

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