That didn’t work as planned: Mexico’s monopoly ends, then oil tanks

Mexico’s crude output has been slipping for 11 years.
Mexico’s crude output has been slipping for 11 years.

By Adam Williams / Bloomberg

The timing couldn’t have been worse. The end of the 76-year Petroleos Mexicanos monopoly was supposed to unleash an investment flood with companies rushing to develop massive oil reserves. It was going to be historic, and then came the rout.

“It’s tragic that Mexico waited so long to open the sector and that when an administration finally passed a meaningful energy reform, the bottom just falls out of oil prices,” said Tim Samples, a Mexican-energy analyst at the University of Georgia in Athens. “The parade did not last very long.”

Now opponents of President Enrique Pena Nieto, who was accused in some quarters of treason when he denationalized the industry in 2014, are saying they’re being proven right. Some want to bring the monopoly back.

The sweeping energy-sector overhaul was designed to attract major outside investment for the first time since Mexico booted foreign oil and gas companies in 1938. But not as many new players as expected have come in. There’s concern low oil prices might hurt the appetite for deep-water leases to be auctioned later this year.

http://www.bloomberg.com/news/articles/2016-02-22/that-didn-t-work-as-planned-pemex-monopoly-ends-then-oil-tanks

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