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

The Political Prospects for Energy Reform Dr. Duncan Wood Director, Mexico Institute WWICS Duncan.wood@wilsoncenter.org Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP both limited liability partnerships May 2013 established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

Mexico’s Oil problem 8 th Annual Global Energy Conference The World Turned Upside Down Decline in reserves (restitution rate) Lack of Lack of Decline in investment new and new discoveries technologies Decline in production 2

Pemex crude production, annual average '000 bpd, 2007-2012 3,500 3,076 3,000 2,792 2,601 2,576 2,550 2,530 2,500 2,000 2,000 1,500 1,000 500 0 2007 2008 2009 2010 2011 2012 (est) 3

Natural Gas 8 th Annual Global Energy Conference The World Turned Upside Down The shale revolution Perverse incentives Preparing for the future The need for Can Pemex do this investment alone? 4

Seeking Reform 8 th Annual Global Energy Conference The World Turned Upside Down The The The The The Pacto The Pacto reform prominent por agenda issue Mexico 5

Pemex 8 th Annual Global Energy Conference The World Turned Upside Down Reorganizing the company the company Operational freedom •Investment decisions •The ability to enter into joint ventures Company finances The union •Debt •Pensions liabilities 6

Priorities for the LXII legislature 8 th Annual Global Energy Conference The World Turned Upside Down Labor Financial Education Pacto Pacto por Mexico Fiscal Telecoms Energy 7

Energy as the Prominent Issue 8 th Annual Global Energy Conference The World Turned Upside Down 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? 8

The Pacto por Mexico 8 th Annual Global Energy Conference The World Turned Upside Down Peña Nieto’s ability to marshal The PRI’s unity within relations the PRI with other parties The state of the PAN and the PRD Reform 9

The Options for Reform 8 th Annual Global Energy Conference The World Turned Upside Down Across the board opening Is constitutional Deepwater change needed? change needed? Shale Pemex 10

Models for Pemex Reform 8 th Annual Global Energy Conference The World Turned Upside Down Banco de Saudi Aramco Petrobras Mexico model model model • Make Pemex • Pemex as a • Publicly independent independent company: company: traded traded completely company but • Remove from owned by with majority budget government ownership by process but allowed government to strike alliances with private sector 11

Factors Impacting Reform 8 th Annual Global Energy Conference The World Turned Upside Down The experience with labor, education & telecoms reform Political capital, capital, PRI unity PRI unity political credit and blame Reform The need to send the right Negotiations in message to the the Congress markets 12

Click to edit Master title style Duncan.wood@wilsoncenter.org THANK YOU THANK YOU 13