- Daily Zen
Mexican President Enrique Pena Nieto signed into law on Monday new rules legislating an opening of Mexico’s state-run oil, gas and energy industries to foreign and private owned businesses.
Pena Nieto announced that the administration will give out more details to potential investors by Wednesday which blocks of gas and oil fields will be open for them. It turns out to be a historic event, since the approval will end the monopoly of state-owned oil company Pemex for the first time in 75 years. The president likewise guaranteed to begin putting set up administrative and oversight organizations to execute the new rules before the end of August.
Energy Secretary Pedro Joaquin Coldwell recognized the need to change decade’s old system where government controlled the oil business, which started in 1938 nationalization of foreign oil companies.
“Today marks a watershed, a change in the energy paradigm. It is a change in the way we relate our national identity to energy, to bring it up to date with realities of the 21st century,” Coldwell said at the signing ceremony at Mexico’s National Palace.
The new rules may turn out to be quite good news for major oil and gas giants wanting to set up their business in Mexico. Mexico offers some of the most promising geologies for this particular business. According to an estimate made public by the Energy Information Administration, Mexico may be holding up to 545 trillion cubic feet of natural gas in shale. The oil and gas deposits, which is seen in the northern border of Texas is thought to be extended to the south in Mexico.
Looking forward to reaching out average Mexicans, Pena Nieto guaranteed that they would feel the impacts of the changes economically, with lower power prices and more employments. .
Pena Nieto said that by passing the revamped law “we have overcome decades of immobility, and overturned barriers that prevented Mexico from growing.” One of those major obstructions has been the high cost of natural gas, much of it foreign made and imported into the country as well as electricity rates that are higher than in numerous parts of the United States.
“With this reform we can extract oil from deep waters and take better advantage of our vast deposits of shale gas, to generate electricity at lower prices,” Pena Nieto said.
Mexico’s oil and gas production was at its best in 2004 at 3.4 million barrels a day, however declining persistently to 2.5 million barrels. With the change in the legislation, the government plans to expand production to 3 million barrels by 2018 and 3.5 million by 2025, by pulling in privately owned businesses with the skill and innovation to endeavor the nation’s immeasurable shale and deep-water reserves.