The Political Prospects for Energy Reform Dr. Duncan Wood - - PowerPoint PPT Presentation

The Political Prospects for Energy Reform

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• Dr. Duncan Wood

Director, Mexico Institute WWICS

Duncan.wood@wilsoncenter.org

May 2013

8th Annual Global Energy Conference The World Turned Upside Down

Mexico’s Oil problem

Lack of

Decline in reserves (restitution rate)

Lack of investment and new technologies

Decline in new discoveries Decline in production

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3,076 2,792 2,601 2,576 2,550 2,530 2,000 2,500 3,000 3,500

Pemex crude production, annual average '000 bpd, 2007-2012

500 1,000 1,500 2,000 2007 2008 2009 2010 2011 2012 (est) 3

8th Annual Global Energy Conference The World Turned Upside Down

Natural Gas

The shale revolution Perverse incentives The need for investment Can Pemex do this alone? Preparing for the future

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8th Annual Global Energy Conference The World Turned Upside Down

Seeking Reform

The The The Pacto The reform agenda The prominent issue The Pacto por Mexico

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8th Annual Global Energy Conference The World Turned Upside Down

Pemex

Reorganizing the company the company Company finances

• Debt
• Pensions liabilities

Operational freedom

• Investment

decisions

• The ability to enter

into joint ventures

The union

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8th Annual Global Energy Conference The World Turned Upside Down

Priorities for the LXII legislature

Pacto

Labor Education Financial

Pacto por Mexico

Telecoms Energy Fiscal

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8th Annual Global Energy Conference The World Turned Upside Down

Energy as the Prominent Issue

Enrique Peña Nieto’s consistent message since 2011 Consensus over the need for change Consensus over the need for change The role of the media and the international press PRI & PAN vs PRD?

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8th Annual Global Energy Conference The World Turned Upside Down

The Pacto por Mexico

The PRI’s relations with other parties Peña Nieto’s ability to marshal unity within the PRI

Reform

The state of the PAN and the PRD

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8th Annual Global Energy Conference The World Turned Upside Down

The Options for Reform

Across the board opening Deepwater

Is constitutional change needed?

Shale Pemex

change needed?

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8th Annual Global Energy Conference The World Turned Upside Down

Models for Pemex Reform Banco de Mexico model

• Make Pemex

independent Saudi Aramco model

• Pemex as a

company: Petrobras model

• Publicly

traded independent

• Remove from

budget process company: completely

• wned by

government but allowed to strike alliances with private sector traded company but with majority

• wnership by

government

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8th Annual Global Energy Conference The World Turned Upside Down

Factors Impacting Reform

The experience with labor, education & telecoms reform PRI unity Political capital,

Reform

PRI unity Negotiations in the Congress The need to send the right message to the markets capital, political credit and blame

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THANK YOU

Duncan.wood@wilsoncenter.org

THANK YOU

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