Uploaded on 2016-07-31 by Edgar Antonio Valdés Porras

Case study: Energy reform analysis in Mexico Mexico has the 15th largest nominal GDP -1.261 Trillion USD at 2013- and the 11th largest by purchasing power parity with a US $2.2602 trillion in 2015, and $1.3673 trillion in nominal exchange rates. Mexico is now firmly established as an upper middle-income country stablishing a healthy economy grew of an average of 3.32 percent per year from 2010 to 2014. Mexico main production of fossil fuels came for oil -150.5 Mtoe- and gas -61.9 Mtoe- with a main destination to transport –oil 51 Mtow- and to electricity conversion –gas 33.2 Mtoe and oil 12.1 Mtoe-. On December 21, 2013, Mexico’s sweeping and historic energy reform bill that on August 12, 2014 -a package of energy reform legislation- became law including nine new laws as well as amendments to existing laws establishing a new legal framework for Mexico’s energy industry. The most important characteristic is on assets that will not be privatized, but the nation’s vast oil resources, including offshore and unconventional fields, will be opened to international companies. Mexico has large and potentially accessible oil and gas resources, and is also known for one of the largest, yet currently untapped reserves. On estimation, there are 29 billion barrels of oil equivalent in conventional and deepwater and another 60 BBOE in shale. However, Mexico's oil production has declined 25 percent to 2.5 million barrels per day (bbl/d) from a peak of 3.3 million bbl/d in 2004. Mexican oil exports have dwindled, and the country has also become a significant importer of natural gas and petroleum products. Mexico’s reforms will also create new competition to open up power generation and guarantee nondiscriminatory access to the electric grid. They also aim to promote energy efficiency and renewable energy through new market incentives, auctions and a clearly defined annual roadmap to reach 35% clean energy by 2024. Big questions still surround the role of renewables. On one hand, high-efficiency natural gas units that generate both heat and power – so-called cogeneration plants – qualify as clean energy under the reform. Not surprisingly, solar energy entrepreneurs in stated that reforms would help their industry make a difference by taking advantage of the reform’s new clean energy certificates to help fund projects and new wholesale electricity market rules allowing commercial and industrial businesses to buy power directly from solar power plants or other independent generators. Iberdrola -one of the few foreign energy companies already operating in the country- has committed to investing about $5bn in wind farms and combined-cycle natural gas plants in Mexico by 2018. Allegedly, Mexico could become “the next boom in solar”, fueled by prices on par with wind and even some conventional generation sources.