Dino Barajas Writes for Daily Journal on Mexico Energy Reform

“Mexico's looming energy gold rush,” an article by Akin Gump global project and finance partner Dino Barajas, has been published by Daily Journal.

The article takes as its jumping-off point December’s announcement by the Mexican government of proposed reforms that would allow for “greater private investment in the energy sector, particularly with respect to hydrocarbons (a.k.a. oil and gas)” and notes both the history and recent challenges of government ownership of these hydrocarbon resources.

Barajas then describes the April 30 presentation by Mexico’s president of the implementing legislation necessary to move the announced reforms forward and the likelihood that the legislation will pass through the Mexican Congress thanks to the PRI party’s control of the executive and majority in the legislature.

As he notes, “These historic reforms will permit the private sector direct investment (and co-investment alongside Pemex) in the hydrocarbon sector utilizing production sharing and profit sharing arrangements, among other creative structures, to be proposed as the investment program develops.”

Barajas states that the “primary attraction for the new private sector investors will be in the exploration and exploitation of oil and natural gas resources,” pointing out low-risk, high-return reserves in the Gulf Coast that have gone unexploited “due to lack of necessary technology” as well as shale gas along the U.S.-Mexico border.

He also posits that “renewed interest in the Mexican energy sector as a whole by the international infrastructure development and private equity investment communities will have spillover effects which will bring new participants and increased investment dollars into the sector,” noting an “uptick during the last five years” in renewable energy development in Mexico.

Barajas concludes by noting, “the key to Mexico's success in transforming its energy sector will be to make transparent and consistent strides in establishing a comprehensive design for an open market” and stressing the importance of maintaining the balance between investor confidence in a level playing field created by the new reforms and Mexican public support for these reforms and the improved standard of living they can bring.

To read the full article, click here.