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Mexico Energy Sector Attracts Billions in New Investments

25 April, 2016

When Mexico’s government passed a series of major reforms a few years ago,the goal was to open up the country’s underdeveloped energy sector to outside investment and the plan seems to be working in a big way.

“The timing could not be better,as Mexico is an attractive market with significant opportunities for inbound investment,” leading industry analysts EY told WorldFinance.com. “Mexico,the 14th-largest economy in the world,has abundant natural resources,including both conventional and unconventional oil and natural gas reserves."

Mexican state oil firm Pemex has partnered with US investment giants like BlackRock to increase the nation’s infrastructure investment program,while the World Bank’s private-sector investment arm (IFC) announced a $200 million dollar investment to fund oil exploration and production by Citla Energy. Last fall a new partnership was launched between between US-based power company AES Corp and Mexico’s Grupo Bal,to the tune of a $2.5 billion investment over the next five years.

“The 50/50 joint venture with Grupo Bal aims to direct about three quarters of the five-year investment plan to electricity generation from both conventional and renewable sources,” wrote Reuters. "The unit aims to take advantage of Mexico’s historic energy sector opening.”

In addition,Japan’s Mizuho Bank was authorized late last year to begin operations in Mexico – a move made to permit its clients to invest in Mexico’s booming energy sector.

“At this time we have around 200 clients who are interested in Mexico,potential clients who are interested in Mexico,potential clients that are analyzing investment opportunities in Mexico,” shared the bank’s international business director Hiroyoki Sasaki according to BNA Americas.

Following the reforms,Pemex is expected to remain focused on shallow-water oil,where it performs the best,while foreign investments are expected to be directed mainly to deep water fields. In addition,many of the recent oil tenders include joint ventures between Pemex and private companies. 

“As Mexico opens its oil and gas sector to private competition,IFC’s goal is to support new players that combine strong sector expertise,local and global know-how and adequate capitalization,” stated Ary Naim,who serves as IFC manager for Mexico. “The IFC has $1.4 billion invested in 57 companies in Mexico.”

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