Mexico Briefing: Prospects for Energy Reform in Mexico
The Center for U.S. and Mexican Law recently launched a series of events, entitled Mexico Briefings, to promote the exchange of ideas between lawyers and other professionals in the United States and Mexico. Mexico Briefings will feature presentations by one or more renowned experts on Mexican law and/or U.S. - Mexico relations, and will address important and timely issues of concern to the region. Mexico Briefings are not open to the public -- they provide an opportunity for the Center's Advisory Board members, Sponsors, and friends to engage in a dialogue with noted authorities.
The Center's first Mexico Briefing was held Friday, October 26, at the North American headquarters of Weatherford Corporation, the multinational oilfield services company and Underwriter of our Center. The subject was timely – Prospects for Energy Reform in Mexico, and it featured Juan Carlos Zepeda, the President of Mexico's oil and gas regulatory agency, and Dr. Miriam Grunstein, a Mexican law professor and expert on energy law, as well as an Affiliate Scholar of the Center for U.S. and Mexican Law. Zepeda outlined both the challenges and the opportunities for increasing Mexico's oil and gas development, in light of recent Mexican elections, which offer the opportunity for new directions in spurring investment, including private investment. Zepeda noted the historical and foundational nature of constitutional prohibitions on foreign investment in hydrocarbons, but he also noted the inability of PEMEX, Mexico's national oil company, to exploit Mexico's resources under its current structure. He pointed out that PEMEX is not a corporation, but a decentralized agency of the Mexican government. As such, it is not accountable to shareholders, and is not required to submit to the transparency to which a privately held corporation would be held. Among the potential reforms being discussed in Mexico is the possible change of PEMEX's legal status, to create the company as a corporation with shareholders. Under such a change, the Mexican government would be likely to hold the predominant shareholder interest, but room could be made for the possible sales of shares to private shareholders as well. Such a change in structure would require a constitutional amendment. While Mexico's constitution has been amended hundreds of times, Dr. Grunstein pointed out that this change would be vigorously opposed by political parties. Much depends on the approach to be taken by the new government of President-elect Enrique Peña Nieto, who has yet to indicate the stance that he will take.