Mexico´s Anticipated Energy Reform Is Now A Reality

A step forward in the modernization of Mexico's energy sector, the long-in-the-making Mexican Energy Reform, substantially diluted from its original to ensure passage through a divided Congress, is still considered by experts as sufficiently far-reaching to shore up the country's flagging oil industry.

The Reform omits controversial risk-sharing alliances but allows sweetened-service contracts with the private sector by including performance-based incentives, leaving it up to PEMEX to come up with competitive terms to entice investment. Legislators appear to expect that not allowing foreign companies to book reserves will not be a deterrent.

The main purpose of the legislation is to give PEMEX more flexibility in contracting and in working with outside companies, and to have more control over budgets and investment. The key aspects of the Reform are: