Wednesday, November 26th1.1°C
24157
23715

Mexico courting Canadian investment in newly reformed energy sector

CALGARY - Mexico is laying out the welcome mat for Canadian companies to participate in its energy sector, which is opening up to outside investment after more than 75 years of government control.

A delegation of Mexican government and business officials came to Calgary on Monday to court Canadian expertise and investment. The country has huge untapped oil and gas potential in tough-to-access shale formations, but its state-run oil firm, Petroleos Mexicanos (PEMEX), doesn't have the financial wherewithal or technical know-how to exploit it.

Mexico's production has been in sharp decline for the past decade, and the reforms are meant to ensure it can export more than it imports in the years ahead, said Leonardo Beltran Rodriguez, Undersecretary of Planning and Energy Transcription at Mexico's energy department.

"Mexico is fully committed to the transformation of the energy sector and if we are to take advantage of these resources, we can do it with many people," he told a Calgary business crowd Monday.

"But better we do it with friends."

The energy reforms were passed by Mexico's Congress in December, but still require a raft of secondary legislation to become fully implemented.

Calgary was the first city in which the Mexican officials made the pitch — even before stops in Houston or New York.

The reforms aim to end PEMEX's monopoly over oil and gas development and Comision Federal de Electricidad's control over the power sector by the end of next year. Both will still be owned by the government, but the goal is for them to operate more like corporations.

A report by the Canada West Foundation and Mexican economic think-tank Insituto Mexicano Competitividad released Monday says the biggest opportunities for international players can be found in Mexico's shale oil and gas frontier, potentially drumming up business for Canadian service and equipment companies.

"Canada's strong position in the energy sector and its political, geographic and economic ties to Mexico could benefit Canadian companies across the value chain," said the report.

Last year, Mexico produced 2.5 million barrels per day of oil, down from 3.4 million barrels in 2004. But its potential to grow its crude production from so-called tight oil plays — where it's difficult to make the oil flow to the surface by conventional means — is formidable. It's believed to have the fifth-largest tight oil resource potential in the world, according to the report.

Meanwhile, Mexico imported 1.3 billion cubic feet per day of natural gas last year to meet burgeoning demand from the energy sector. It's currently the world's 18th largest producer, but that, too, has the potential to grow significantly thanks to technological advances. Mexico is believed to have the world's sixth largest technically recoverable shale gas resources.

Mexico is aiming to complete new environmental regulations for shale oil and gas within the next two or three months, said Galo Galeana Herrera, director general of energy and extractive activities.

It's drawing some lessons from the U.S. experience with hydraulic fracturing, or fracking — the controversial method used to extract oil and gas from rock formations deep underground. For instance, baseline studies are being done on air quality, aquifers, biodiversity and soil ahead of time, he said.

There's a lot about Mexico that could be attractive to Canadian firms, said Carlo Dade, with the Canada West Foundation.

"Mexico's something we've had our eye on for awhile as an opportunity," he said. For instance both countries are members of the North American Free Trade Agreement and are neighbours with the United States.

However, the report flags some risk factors, such as uncertainty over how the energy reforms will be executed. Crime and violence is also an issue in some of the areas with shale potential.

An "unintended consequence" of increased Mexican production could be more intense competition with Canadian oilsands crude in the market, the report said.

One of the rationales for the stalled Keystone XL pipeline, cited by its supporters, is its potential role in displacing waning Mexican and Venezuelan heavy oil imports to the U.S. Gulf Coast with a steady supply from Canada.

U.S. imports from Mexico are down 41 per cent over the past six years, while imports from Canada are up by 25 per cent.

"If Canadian services help to rehabilitate the Mexican industry, Canadian sales expectations to the U.S. might have to be revised," the report says.

Follow @LaurenKrugel on Twitter

The Canadian Press


Read more Business News

24241


Recent Trending




Today's Market
S&P TSX15038.41-35.24
S&P CDNX771.06-9.58
DJIA17827.7512.81
Nasdaq4787.317+29.065
S&P 5002072.83+5.80
CDN Dollar0.8888+0.0004
Gold1197.00-0.10
Oil73.48-0.61
Lumber327.90-1.60
Natural Gas4.295+0.144

 
Okanagan Companies
Pacific Safety0.160.00
Knighthawk0.01-0.005
QHR Technologies Inc1.34+0.02
Cantex0.045+0.005
Anavex Life Sciences0.171-0.004
Metalex Ventures0.035+0.005
Russel Metals31.50-0.64
Copper Mountain Mining2.16+0.01
Colorado Resources0.12-0.01
ReliaBrand Inc0.0134-0.0001
Sunrise Resources Ltd0.045-0.005
Mission Ready Services0.34+0.015

 
23744


24053

FEATURED Property
212215512212 Kalavista Dr,
3 bedrooms 3 baths
$660,000
more details
image2
Click here to feature your property
Please wait... loading


The last great Canadian tax shelter

A guide to how flow-through fund limited partnerships can mightily aid your tax planning!The end of the year will raise concerns among many professionals, self-employed persons, business owners and ev...


What I learned in China: Part 2

As per my previous article on my visit to China, we have much to learn about and from their people. It is potentially the largest market on earth with 1.3 billion people in one country but much will d...


Retirement: Health Issues

Our health is really our greatest asset and maintaining our health is of tremendous importance. You want to do what you can to ensure that health issues will not jeopardize the enjoyment of your retir...

_



24158

24231


Member of BC Press Council


22842