Mexico to benefit gradually from foreign participation in oil industry, expert says

MEXICO CITY — Mexico’s move on Friday April 1 to allow eligible companies to import oil into Mexico will rapidly benefit the country’s northern cities and gradually benefit the whole nation, an expert told Xinhua, the Chinese news agency.

Any companies that meet the government’s requirements can import oil, although private infrastructure capable of storing and transporting oil to other cities are still insufficient, said Fabio Barbosa, energy researcher with the National Autonomous University of Mexico.

He said northern cities along the border with the United States will benefit since oil companies will be able to use nearby facilities to provide oil at affordable prices.

“The Pacific coast, in particular, has large existing markets such as Tijuana which already has established pipeline networks. It seems natural to invest in such markets in the short-term,” said Barbosa, adding that “in more distant markets like Mexico City, investments in transport and storage will take a while to materialize as the cost will be higher.”

However, Barbosa warned that Mexicans will still have to wait a few more years before getting access to the gas from brands other than the national-owned Pemex. Although companies have been allowed to open gas stations in Mexico since the beginning of 2016, they can only sell Pemex-branded gasoline.

The opening-up is part of Mexico’s energy reform. Launched in 2013, it will gradually allow private and foreign companies to distribute and sell fuel, which has been monopolized by Pemex since 1938 when Mexico nationalized the oil industry.

The import of oil was originally set to begin in 2017, but President Enrique Pena Nieto in February advanced it to April 1, expecting the nation’s demand for oil to rise steadily in the years to come.

Mexico currently imports 793,000 barrels of oil per day, 54 percent of which are imported from the United States and distributed by Pemex.

According to the Ministry of Economy, Mexico’s demand for oil will rise by 3 percent a year in the next 15 years.

The government has promised to allow private companies to use the thousands of kilometers of pipelines that belong to Pemex in exchange for a fee.

This was a positive step, noted the expert, adding that Pemex’s old network is often in need of maintenance and vulnerable to criminal groups, which have stolen an estimated 23,000 barrels of oil per day on average.

Barbosa suggested that the government should enhance the national security situation to promote the confidence of domestic and overseas investors who invest in Mexico’s much needed infrastructure construction.

“All of these will be evaluated by the private companies which will want to see positive changes in Mexico before investments roll in,” said Barbosa.

Source: xinhuanet.com

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