Agenda
Challenges
Mexican oil giant PEMEX held a road show in Houston on 8 March 2011 under the banner of its “new integrated EP contract” model to lure more E&P players to that nation’s struggling oil patch. Underscoring interest in the new contracts, and despite the Mexican state’s tight grip on reserves, around 250 people attended the event. They represented different sectors of the energy industry, from operators to contractors.
This document shows 2009 energy statistics regarding the supply and demand, within the national territory, of all the energy sources, and reviews the information of the previous year. It also incorporates useful information for the analysis of the performance of the energy sector and for the design, formulation and implementation of public policies on this subject
Political
Document in Spanish with an executive summary in English. Mexican report to the Intergovernmental Panel on Climate Change containing information on its emissions and programmes for climate change adaptation and mitigation.
Status
Growth
Fossil-fuel carbon dioxide emissions from Mexico grew exponentially at a rate of 6.5% per year from 1891 to 1982. Since 1982, total fossil-fuel CO2emissions have slowly grown and now stand at 130 million metric tons of carbon. Emissions growth over time has been due to increasing oil production and in 2008, 59.8% of emissions were from petroleum products, the highest fraction of crude oil dependence of the major CO2-emitting countries.
Targets
In November 2009 the government adopted an energy savings program (PRONASE) for the period 2009- 2012. It estimates the energy savings potential at 2 percent in 2012 and 18 percent in 2030, compared with a reference scenario. The plan identifies seven priorities: road transport vehicles, lighting, household appliances, cogeneration, electric motors, energy efficiency standards for new buildings and water distribution.
Institutional Structure
Agency
Rossana Fuentes Berain’s essay in this publication examines the process of a debate that dominated Mexican politics in 2008, assessing the challenges facing Pemex, the different options for reform, and the highly charged nature of energy politics in Mexico.
This paper examines the causes behind the increasing technological gap between the Mexican oil industry and its international counterparts through an in-depth, inside-the-firm analysis documenting the evolution of the relationship between the Mexican government, Pemex, and its research branch, the Mexican Petroleum Institute (IMP). Flores-Macias is a Ph.D. Candidate at the Department of Political Science, Massachusetts Institute of Technology.
Institute of the Americas reveals the important political leap Mexico has made in 2008 by approving energy reform legislation aimed at reinventing state-run oil company PEMEX and its financial, managerial and contractual abilities.
Comisión Federal de Electricidad (CFE)
The Federal Electricity Commission (CFE) is a company created and owned by the Mexican government. It generates, distributes and markets electric power for almost 35.3 million customers. This figure represents almost 100 million people. The CFE incorporates more than a million new customers every year.
Ministry of Energy (SENER)
The Ministry of Energy (SENER), mindful of the sustainability objective outlined in the 2007-2012 National Development Plan6, proposed the need for a set of energy efficiency indicators in the most energy-intensive sectors, as well as an improvement in the energy statistics available. As a result, SENER and the International Energy Agency (IEA) began a joint project funded by the British Government through the Strategic Programme Fund (SPF).
Budget
Government Budget
The energy sector, and particularly the oil industry, is critical to the economy. Revenues and taxes from the state-owned oil company provide nearly one-third of the total government revenue, from which Mexico’s social development is mainly funded (Inegi, 2011; SHCP, 2011).
Rentier State
PEMEX’s huge contribution to government revenues has created two problems. The first is fiscal. Government income from oil revenues reduces the need (and in practice, the ability) to collect other taxes – the hallmark of a so-called “rentier state”. Today, oil revenues provide close to 40% of the government’s budget. As a consequence, fiscal collection in Mexico is 15% of GDP – low when compared with the OECD average of 28%.
Functioning of PEMEX
Mexico nationalized its oil industry in 1938 and since then foreign investors are not allowed on the hydrocarbons market. During 2000-2006, PEMEX was obliged to maintain an annual primary surplus of over 100,000 million pesos, even though PEMEX was incurring debt to meet its own requirements, not only for investment, but also for maintenance.
Key Policies
Energy Sector Reform
The most important new legislation is the 2008's Energy Sector Reform. The reforms aimed to give Pemex greater budgetary authority, update its statist corporate structure, and allow the company to contract foreign firms to improve production and exploit untapped resources in the depths of the Gulf of Mexico -- where most of the country's hydrocarbon deposits lie. Moreover, it included policies for generating more renewable resources.
Despite its current place among the top-10 oil exporters in the world, Mexico remains on the path of becoming a net oil importing nation within the next decade. All three of the country's leading political parties acknowledge this reality and the need for deep, structural changes to the Mexican energy sector. Without profound reforms, the hundred-year-old link between the oil sector and the government will continue to politicize the debate-and limit the Mexican Congress's ability to enact the improvements that will most benefit Mexicans.
Energy Savings
In November 2009 the government adopted an energy savings program (PRONASE) for the period 2009-2012. It estimates the energy savings potential at 2 percent in 2012 and 18 percent in 2030, compared with a reference scenario. The plan identifies seven priorities: road transport vehicles, lighting, household appliances, cogeneration, electric motors, energy efficiency standards for new buildings and water distribution.
Miscellaneous
Subsidies
The transport fuel subsidy bill expected to reach 250 billion pesos (approx. US$ 20 billion) in 2008. According to official numbers from the 2008 Mexican government’s budget, the subsidy to gasoline and diesel in 2008 amounts to 2.4% of the country’s Gross Domestic Product (GDP). Isolating gasoline for automobile use, the subsidy turns out to be 0.27% of GDP. The government, therefore, has decided to eliminate the gasoline subsidy gradually, with the price of gasoline rising in monthly, and now weekly, increments.
Transition to Globalisation
Crude Oil; Are We Running Out?
So, oil is our fuel of choice. When will it run out? Oil predictions can easily fall into end of the world scenario categories, so it’s important to sort through the rhetoric and mine out the nuggets of truth. If you don’t sort through the garbage, then simple mathematics can lead you to some pretty disturbing conclusions.
Globalisation > Economy > Energy> Sources > Non-Renewable > Oil
Transition to Tools
Making Economic Sense
Book on the economics of NAFTA. The author lines up NAFTA among "ten great economic myths".
Tools >Regional> North America>NAFTA>Domestic Policies
Transition to Actors
Mexico's Ruling Party: The New Old Guard
How ten years in power have changed the former opposition leaders.
Actors >Political Parties>National>Mexico
