Daily Journal Publishes Dino Barajas Article on Mexico Energy Reform

The article “Mexico’s Quiet Energy Revolution” by Akin Gump global project finance partner Dino Barajas has been published by Daily Journal.

In this piece, Barajas discusses the proposed reforms to Mexico’s constitution introduced by President Enrique Peña Nieto to allow the private sector, including foreign companies, to participate “alongside [Mexican state oil company] Pemex in the exploration of one of Mexico's most important natural resources.”

While noting national pride over Mexico’s control of its natural resources, Barajas also points to Pemex’s “need for deep water drilling technology, controlled by foreign private oil companies” as well as for continued revenue production from Pemex for the country’s many social programs.

Barajas discusses conditions in other oil-rich nations, which have reached mutually beneficial arrangements with private sector entities to “explore and exploit government controlled oil and gas fields,” and contrasts the terms of those arrangements with the one proposed for Mexico’s sectoral reform.  He identifies as the fundamental difference the fact that, in Mexico, private sector participants would not own a share in the commodity itself, but, instead, would receive “monetary payment based on the value of the extracted commodity.”

He concludes by noting, “Given that economic and technical necessities have brought Mexico to these unavoidable crossroads, the near-term development of Mexican energy market will have critical implications in shaping the political and social landscape of Mexico for decades to come. The potential for improving the country's economic outlook through tangible improvements in its oil production capabilities and the government's ability to point to the fact the ‘ownership’ in the actual commodity remains safeguarded within Mexican hands may be sufficient for President Peña Nieto and his administration to overcome public opinion arising from nationalistic sentiments surrounding Pemex's monopoly.”

To read the full article, please click here .