On July 19, 2013 the National Action Party (Partido Acción Nacional “PAN”) presented to the public an informal proposal for a constitutional reform in order to amend the existing energy legal framework set forth in the Mexican Constitution (the “Reform”). It is expected that the PAN will formally file the Reform with the Mexican Congress on July 22, 2013.
Once the Reform is filed, it will be discussed in the House of Representatives and in the Senate. The Reform must be approved by two thirds of each of the two chambers and by a simple majority of the states legislatures in order for the Reform to pass.
Below please find the main points of the Reform:
Scope of the Reform
- The Reform has as its purpose to strengthen Petroleos Mexicanos (“PEMEX”), not by its privatization, but granting PEMEX budget and management autonomy.
- The creation of a concession regime under the Ministry of Energy in order to grant concessions to private entities for the exploration, exploitation, refining and conversion of hydrocarbons into petrochemical products.
- To promote competition between PEMEX and private entities in the exploration and production of hydrocarbons by the opening of refinery, transportation and petrochemical industries to the private sector.
- Promotion of renewable energy.
- Promotion of natural gas as a transition fuel by promoting the opening of the exploration and production of shale gas.
Intended Benefits of the Reform
- Yearly investment of 20-30 billion dollars in the energy sector.
- Yearly growth of 1-2% of the gross domestic product.
- Energy Independence.