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Mexico Energy Reforms Attract Billions in New Investment Deals

30 July, 2014

Ever since Mexico passed historic legislation that opens the nation’s energy sector to foreign investors, the world has started paying very close attention to what is happening in Latin America’s second largest economy. Over the last week alone, U.S. state of California Governor Edmund G. Brown and Japan’s Prime Minister Shinzo Abe traveled to Mexico to sign energy deals.

Governor Brown of California Visits Mexico 

“During one of the most high-profile events of his four-day trade mission here,Brown signed an agreement with Mexican environmental officials to explore new ways for California to work with its southern neighbor on reducing greenhouse gas emissions,” reports the L.A. Times. “The [agreement] calls for promoting renewable energy, studying ways to control ozone-eating pollution and sharing information on successful strategies.” 

There is much less political debate in Mexico than in the U.S. about whether or not climate change is really an issue, and as a whole lawmakers seem to realize that there will be huge economic benefits that come with being on point with climate change in the near future. In fact, opening up the nation’s energy market to foreign investment will not only affect the oil and gas industries in Mexico, but the move will also create new opportunities for developing renewable resources, such as solar and wind. 

“We would like to see more business in these technologies,” said Rodolfo Lacy Tamayo of Mexico’s Ministry of Environment and Natural Resources.

Japanese Prime Minister in Mexico City

In a highly publicized move to strengthen Japan’s economic and diplomatic ties with Mexico,Japanese Prime Minister Shinzo Abe met with Mexican President Enrique Peña Nieto this week, discussing new investment deals that will expose the potential of Mexico’s oil and shale gas fields to Japanese markets. Specifically, the leaders struck a deal regarding cooperation between the two nations in energy supplies.

“A deal was signed between Japan Oil and Metals National Corp. (JOGMEC) and Mexico’s Pemex,” writes the Latin Post. “The deal includes the production of a pipeline from fields in the Gulf of Mexico to the west coast, where the natural gas would be liquefied and sent to Japan.”

Expected to be in full operation by the mid-2020’s, the plan will also see Japanese companies helping Mexico develop the natural gas fields and LNG facilities in the near future, equaling an estimated investment valued at more than $9.8 billion.

In addition,Japan and Mexico have signed a new deal that allows Japanese companies to earn carbon credits by investing in technology to cut greenhouse gas emissions in Mexico, which promotes the use of these technologies, products, systems, services and infrastructure. 

Energy Security

The government of Mexico is also taking additional steps to secure the nation’s energy for the future, which will stimulate economic development at the same time. Other interested investors include Mitsui, which is Japan’s largest energy company, as well as SapuraKencana, which is Malaysia’s biggest oil and gas company.

“The government believes that greater private sector investment in power generation in Mexico will ultimately lead to more diverse generation sources and new opportunities,” writes London’s Oliver Kinross, Ltd. “It is a very exciting time for Mexico; many policy makers have come to realize the huge opportunity that energy offers on a global scale.”

This October, some of the most prominent figures from the energy industry will convene in Mexico City for the Mexico Oil and Gas Summit, which is co-hosted by the Mexico Power Summit and the Mexico Energy Industry Awards. A very high profile event,  topics include an overview of the latest opportunities in Mexico since the legislation.

Topics: Investment Industry Technology