Mexico’s energy reforms being hamstrung by over-complicated regulations

Mexico’s energy reform policy is being hampered by complicated regulatory requirements, according to Reuters which cites company bosses and government data to back up the claim.

Energy reform began in 2013 when President Enrique Pena Nieto started opening up the nation’s oil fields to foreign investors and reducing the monopoly position of state oil firm Pemex.

The Mexican authorities have auctioned off the rights to more than 100 potential drilling sites – including many offshore – but progress is slow with about two thirds of those.

Many companies complain that the process for receiving approvals is cumbersome and arduous, the regulatory framework is too complicated, and ASEA – the country’s safety, energy and environment regulator – is too slow moving.

For example, it can take six months to evaluate an environmental impact report and three months for a final drilling permit. Furthermore, companies must show they have insurance policies and environmental protection plans for each project.

The Organization for Economic Cooperation and Development has called for ASEA to have more “institutional agility and autonomy” to try to grease the wheels towards quicker economic progress.

And lately some of the inertia is coming from oil companies concerned about the potential election of leftist Andres Manuel Lopez Obrador to the national Presidency in the 1 July election.

Lopez Obrador has said he would put the brakes on energy reform and maybe reverse some of it, causing understandable jitters to firms that have invested in E&P.

Donal Scully

With 28 years experience writing and editing for newspapers in the UK and Hong Kong, Donal is now based in California from where he covers the Americas for Splash as well as ensuring the site is loaded through the Western Hemisphere timezone.
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