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Energy Reform in Mexico Will Power Future Growth

21 May, 2013

For the last 75 years,the government has controlled Mexico’s massive petroleum and shale gas resources in a state-run monopoly known as PEMEX. Today,moving the company into the modern era and opening it up to foreign investment is one of President Enrique Peña Nieto’s top priorities.

“The U.S. Energy Information Administration calculates that Mexico’s gas deposits are the fourth largest in the world,with the potential to ensure decades of low-cost energy and give manufacturers an additional incentive to invest in Mexico over places such as China,” writes The Washington Post. “Mexico remains the third-largest source of foreign oil for the United States after Canada and Saudi Arabia.”

The reforms are expected to take place by late summer and will likely give outsiders the opportunity to invest in Mexico’s wealth of energy resources. The changes will also reportedly introduce new technology and accelerate growth; thereby lowering electricity costs for families and businesses throughout the country.

The proposed reforms are already attracting interest from Texas companies and other energy industry leaders,including the South Texas Energy and Economic Roundtable (STEER) coalition of exploration companies,which says the changes will bolster U.S. business interests in Mexico real estate. The reason is simple: When you allow the private sector to get involved,growth soon follows,as companies find ways to increase business. Considering that oil imports to the U.S. have already tripled over the last ten years,the new overhaul plan is expected to bring exponential growth in coming years.

In other energy news,Mexico is leading the clean energy investment boom that is currently taking Latin America by storm,prompting industry experts to predict that it will lead the global clean energy revolution in the future. Last year Mexico invested $1.9 billion in clean energy – an increase of 595 percent on 2001,which has provided a major advantage for clean energy finance in the region.

Finally,the nation’s energy minister has revealed that Mexico is still far from tapping its shale gas potential,despite the fact that it has some of the world’s largest reserves. To bridge the gap and meet increasing demand in the short term,PEMEX reportedly plans to drill 10 test sites throughout Mexico in 2013 and will also triple its natural gas imports from the U.S.