News Article

Oil and Gas Policy Outlook: Industry Wish List

Thu, 07/19/2018 - 13:31

As Mexico prepares for another political transition following President-elect Andrés Manuel López Obrador’s victory on July 1, the country’s oil and gas industry is waiting to see which direction the administration will take regarding the sector. Mexico Oil & Gas Summit 2018, held at the Hotel Sheraton Maria Isabel on Wednesday, provided a platform for industry players to contribute to the discussion of what the industry needs and how to coordinate efforts between the new administration and the private sector to capitalize on the milestones already achieved by the industry.

In his capacity as President of AMEXHI, the Mexican Association of Hydrocarbon Companies, Alberto de la Fuente insisted the private sector has the will to establish a teamwork dynamic with the new administration according to four core principles: competition, continuity, transparency and knowledge. As López Obrador’s transition team takes up positions in key ministries and public offices, the industry is waiting for pronouncements on the next licensing rounds, scheduled for later in 2018.

De la Fuente said that AMEXHI and the new administration share common ground regarding the vision of economic growth propelled by the success of the country’s oil and gas industry. This includes a robust social agenda rooted in creating jobs. Private companies’ international experiences could also contribute to building on the achievements related to transparency, openness and dialogue that the incumbent administration put in place.

Giving a voice to the companies further down the industry’s value chain, Jan Frowijn, Director General of ROSEN Group Mexico, highlighted the necessity to prepare for the new business reality in Mexico, with significant opportunities following the country’s accomplishments in offshore developments from the Licensing Rounds, specifically in liquid storage, refining capacity and pipeline integrity services. By aligning global best practices to Mexico’s industry specifics, the country’s private sector can develop healthy and beneficial competition, both for local companies and players coming from abroad looking for a market foothold. With an increased focus on injecting innovative technologies and processes, the country can seize the opportunity to build a strengthened industry on the basis of top-tier technology and effective safety and environmental practices.

Roberto Martínez, Head of the OECD Mexico Center, commended Mexico’s standing as the most active OECD country in pushing forward critical structural reforms, as well as the roles of CRE, CNH and ASEA, both as industry regulators and enablers. Looking ahead, regulators are called to coordinate performance criteria focused primarily on transparency and openness to private initiative, while the new administration should continue guaranteeing an equivalent level of independence and autonomy, as ASEA still lacks a full-fledged governing body in the image of its regulatory peers, CNH and CRE. Martínez also congratulated the regulators’ strategic planning with a long-term vision, critical for the industry. Equally important is for regulators to continue the coordinating efforts materialized with the creation of the Coordinated Assistance Office of the Energy Industry (ODAC) for in integrated, digitalized information and management systems, coupled with coordinated accountability mechanisms and strengthened consulting mechanisms with the private sector.

While regulatory transparency has been the name of the game during the Energy Reform’s consolidation, communication is the other side of the same coin. Carla García, President of the Energy Commission of the American Chamber Mexico, said the success and continuity of the licensing rounds and their inherent investment flows are rooted in effective communication of the benefits of such processes to the entire value chain and to the general public. Public access to all relevant information from the rounds, farmouts and contract migrations is essential for the industry’s prosperity and the general acceptance of the policy, aiming at the industry’s consolidation. Regulators must continue showcasing the same transparency shown so far, which has received international recognition.