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Energy Industry

posted 2009-03-23
10 States on the race for oil refinery
The states of Campeche, Guanajuato, Hidalgo, Michoacan, Oaxaca, Puebla, Tabasco, Tamaulipas, Tlaxcala and Veracruz have confirmed their participation in the assembly to define the location of the new PEMEX oil refinery. This event will run from Wednesday 25th until Friday 27th of March.

posted 2009-03-18
PEMEX board of directors enlarged
The Mexican Senate confirmed the designation of four new members (independent professional commissioners) of PEMEX board of directors. The state owned company Committee of Transparency and Accountability will be lead by one of the four commissioners posted.

posted 2009-03-03
Positive 2009 production target for PEMEX
PEMEX estimates 2.75 million barrels per day crude oil production for 2009. After years of constant declining, the 2009 target measures up to the 2008 (2.79 mbd) reported production. PEMEX officials argue that the output of Ku-Maloob-Zaap and Chicontepec fields will cover Cantarell´s constant decline.

posted 2009-02-17
Chicontepec 4 times bigger than Cantarell
PEMEX officials recognize the existence of a huge oil reserve in Chicontepec; a petroleum system located between the states of Puebla, Hidalgo and Veracruz. Still, they argue that the characteristics of the area make massive production unviable at this time.


PEMEX/Energy reform in a nutshell

March 03, 2009. 23:46

The government energy reform lived a full loaded whirlpool of ideas and proposals during 2008. After several months of tough debates, in October 2008 the Mexican Congress agreed a statement with the majority vote of the three main political parties. The reform did not fulfill a specific opinion group, but the aggregate vision of a country shaped by a mosaic of believes concerning the national symbol of wealth and sovereignty.

PEMEX is the third crude oil producer worldwide. It produces crude oil, natural gas and refined products. This state-owned company represents the most important source of government income with a participation of 33.8% in 2008.

In 2008 the political leaders of Mexico held a sound debate to build a new legal framework for PEMEX with the intention to improve the company´s autonomy, transparency and accountability; while promoting the participation of private investment players in specific activities.

PEMEX reform results could be underestimated by some who argue limited changes and a lack of attractiveness for private participants; or criticized by others because of the “bargain” offered by the government to not public interests. Still, PEMEX is probably one of the last cherry-cakes in the world scenario, so the gap for exploring new business initiatives based on the new legal framework developed for PEMEX should not be taken too lightly. In the end, the best is to focus the question in the facts.


corporate governance
PEMEX board of directors composition was enlarged by four new members named independent professional commissioners who are proposed by the President of Mexico and ratified by the Mexican Senate (Senado de México). As a result, the board will total fifteen members: six government officials, five representatives from PEMEX labor union, and four independent professional commissioners. On February 24, 2009 the Mexican Senate received the proposal for the four members’ designation sent by President Calderon. On March 18, 2009 the Senate confirmed the designation of the four new members (independent professional commissioners) of PEMEX board of directors. Finally, on May 14, 2009 these new members took their posts on the board.

transparency and accountability
The new administrative structure of PEMEX considers the creation of a committee responsible of the development of internal mechanisms of control and information dissemination to encourage the accountability of the company´s officials and workers. The Committee of Transparency and Accountability must be lead by one of the four independent professional commissioners.

PEMEX´s tax regime, budget execution & debt
The analyzed reform, plus other tax budget initiatives passed by the Mexican Congress, has left a greater cash retention capacity to PEMEX. A reduction of the crude oil production duty and a recognition of differentiated tax rates for each oil field exploration and production related to the complexity of the geographical circumstances have created a tax relief for PEMEX. In addition to this, the flexibility gained in the way PEMEX spends the money will accelerate the exploration in deep waters. Finally, PEMEX has reached certain autonomy in the management and procurement of new credits, which will lead to a partial reduction of PEMEX debt leverage.

Mexican citizenship bonds
With the intention to create empathy with Mexican citizens and to promote transparency in PEMEX, the energy reform includes the creation of special PEMEX bonds limited to the Mexican citizens. The rules for issuing such bonds are still under analysis by a technical committee in PEMEX.

development of a national supplier’s base
PEMEX will establish a program to facilitate and promote the acquisitions and service contracts to Mexican SMEs. Furthermore, financial resources will be destined to support the creation of domestic value chains with Mexican companies. A fund of 5 billion pesos will be operated in 2009.

private services activities
The new legal framework stays in concordance with the Mexican Constitution regarding the national property of the hydrocarbon reserves. In addition to this, it has been established that any joint-venture or service contracts made with private entities must be paid in cash, and disallows the possibility of partnership concessions related to percentages of domain.

technical hydrocarbon committee
A new technical Hydrocarbon National Committee has been created as an autonomous entity from the Energy Ministry. This Committee will define the long term governmental policy for exploration and production of energy in Mexico.

renewal energy transition act
A new law was created to regulate the development of new energies, define the national strategy and guidelines for a proper energy transition in the future, and finally the means for financing such initiatives.

In short, PEMEX aspires to have a deep improvement in facilities maintenance and security, to strengthen the investments in oil reserves enlargement, to increase the gasoline and diesel refining capacity, and to take care on environment.

DoingBusinessInMexico Staff
Published: March 03, 2009. 23:46 | Last updated: May 18, 2009. 10:19
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