Mexico (Typical Country Example of where our expert-teams could be of value).
On 26th August- our practice participated in a webinar organised by the Energy Collective.
The theme and topic of our conversation – interesting:
Mexico’s Energy Reform: Is the country now open for business?
(and you may want to ask yourself the other relevant uestion as well: Are we- the international community ready to do business with Mexico?).
What: In August 2014, Mexico enacted a series of comprehensive energy reform laws, promising to radically transform the electricity and oil and gas sectors. Long controlled by state-owned companies, Mexican President Peña Nieto intended the reforms to open his nation’s energy sector for new private and international investment. One year after enactment of the historic reforms, we will discuss Mexico’s energy sector, the impact of the reforms, and the outlook for the future. Secure my spot! Brought to you by: Shell
(Listen here to the Audio recording : Our practice contribution starts at 19 min: 15 s._, but I suggest you listen to the whole program)
Thank you- very happy to be here with you this afternoon- and share a moment of your time on a very interesting theme and topic: Mexico Energy reform- is the country now open for business?
Well before I go there- and help to answer this question- from our perspective – I like to share with you- 3 slides which tells a little by which lesne I also happen to look also at this query;
Specifically as it is also the year of climate change and the UN post-2015 Sustainable Development Goals and Agenda…
First of all,- and we all may know this by now – our world is in a bit of acceleration (yeas yes before the Chinese stock market), and general expectation is that over the next decades- we are going to share one planet, between 9 billion people- and , if nothing dramatically changes, consuming or needing ever more energy in order to give us the comfort, freedom of movement and the general services and entertainment that comes with modernity….
In addition, and what you may also know- is that the UN is embarking on a groundbreaking mission which is called the Sustainable development agenda.
In simple terms: the UN (and all of it’s member partners) are to agree in September that we adopt a program where we agree “to leave no one behind” (no poverty, human dignity) and that we also take care of our natural environment (climate change, pollution, deforestation, oceans, etc.)
Now combine these two – and then you come to three simple ambitions in our world-
more wealth, no one behind and care for the environment- has brought me and my practice work to a simple observation and mission statement:
EveryEnergy Company and EveryEnergy Architecture in this world can be improved upon in order to raise the availability, affordability and sustainability of energy to all”.- Adriaan Kamp, 2015
Slide 5:- Now I am ready with you to look at Mexico. We have done some intelligence work, and some conversations with some senior officials in order to help to answer the above two questions , I hope interesting- for this afternoon:, so be assured.
And I am very happy with these 2 questions.
In fact- my practice believes- and given the state we are in on energy & sustainability- that we cannot encourage enough cross-border business partnerships and relations on energy and energy matters to emerge:
In fact- this webinar is called The EnergyCollective- and says it in all in fact: only in a collective we can…
in fact- our open invitation for the coming decades is: how best are we to organize ourselves in order to let you , Mexico and me succeed.?
Well first of all- and in simple terms- the energy reform and agreed last August was to
- a) help to restore growth in the Mexican economy, b) turn-around the depletion of production and reserves in the state oil company , c) allow foreign participation and investments, d) and also taking on board a plan and roadmap of the modernization of utility, infrastructure and the energy architecture of Mexico given it’s econOmic base (manufacturing|) and need for competitive prizing and positioning (e.g. local electricity prizes)…..
With the act and law accepted- Mexico Government and officials have had the guts and courage to make this decision, to prepare the PEMEX and institutional frameworks for this to happen- and to open the invitation to the international community with road-shows and working meetings.
In the oil and gas economy of Mexico- the reform has centered around a re-structuring of PEMEX, a installation of an institutional framework and the preparation of first licensing rounds (0, 1 and now 2)
Of course- every thing needs a little bit of time, and adjustment and fine-tuning (and also in view of the current low oil price) between the parties- but in essence- Mexico is open for participation in the different relevant regions of it’s upstream oil and gas economy.
I would like to say some brief words :
Quality Partnerships or proposals to PEMEX and Mexico state are of course of utmost importance. If this process is to succeed that we need results and performance.
Pemex present focus, and due to the low oil price- on maintaining ánd protecting it’s asset base.
On Deep-water we could observe the following depicts :. While Mexico and the US share the Gulf of Mexico, a striking difference is noted between the two sides.
The US Gulf of Mexico is home to more than 70 oil companies and federal offshore oil production accounts for 23 per cent of total US oil production. In 2012 alone, 137 deepwater and ultra-deepwater wells were drilled; in contrast, although 2012 was a record year in Mexico for Pemex’s deepwater activity, only six wells were drilled Oil price, long-arm- strategic partnering with the right multi-national/international company will help. Review licensing structure or development programs.
ON shale- I would briefly say the following: North Eastern Region:- the downside today is logistics, the water situation, the formation bearings, and – a little bit political. But how beautiful if the best and brightest producers from the Eagle Ford in the US could share their working methods in thei region. Given the sensitivities (water, infra and social)- I understand that only pilot programs are envisioned for these early periods.
But there is more in and to Mexico’s Energy reform..
Also the utility sector, power and distribution and of course the opportunity for renewables are being included in the new energy frame.
Mexico’s energy reform is not only essential to help produce new oil and gas, but Mexico’s energy reform is also very relevant and focussed in helping to improve the national energy architecture and consumption- and to create more modernized, more energy efficient situation.
In fact, and if you listen to the voice of Adrian Lajous, a former CEO of PEMEX, and now fellow at Columbia University- it is in his eyes that Mexico’s economy is to gain more by a better and more modern energy distribution infrastructure than the investment in oil and gas.
A paper to that extent is available and for you to read (attached below)
And as we look at the energy reform plans of Mexico- I believe we would also do well if we carry with us our eyes and ears for the poor and deprived:
Its is no secret that in Mexico there is still poverty. And there is no secret there is in Mexico great wealth. My practice works from the background and understanding that – and given the UN Sustainable Development goals and agenda- business and government- together- can do miracles in order to bring everybody in. I would welcome such initiatives and programs to rise as part of the international business relations and Energy reform.
Now- Mexico’s new energy architecture- based on a construct of regulator oversight and state production enterprises is to help
I would like to share a following clear opportunity for better business relations/ and working across borders:
Annually there is a CEM-meeting, where ministers sit around the table and discuss the opprotunities with renewables and infrastructure.
A clear opportunity open to Mexico and the International business community is to sit even better at the table and look at what regional electricity/ gas (infrastructure) networks could be shared and developed, what new renewables manufacturing and distribution capacities can be developed (solar and wind) and Mexico could also “learn and look” better of what today is being done in countries such as Germany, and Denmark: look and see if some of these learnings can be taken in (new) state trials, and see if some of these learnings can be taken in sectors of it’s CFE (the state utility company).:modernizing the utility (think e.g. the new E-on)
I think- the time to do so- is also now.
Finally and not unimportant – when we look at the business and opportunity space- we are to keep our eyes wide open:
It’s about Relationships, about Trust and about Results.
It’s about Politics, Economics, Society, technology and Organisational Risks and Opportunities.
I name you a few- both risks and opportunities-
– International oil Prize and the product uptake in the US market (biggest customer, and maker of prizes)
– Petrobras.- get tangled in corruption.- and the Trump Factor (and that is a joke)
– Social , political (Mr. jamie Rodriquez Calderon from Nuevo Leon also “El Bronco and may be or become a dis-believers of the program
– Relationships (professional- dis-believers in the program) and PEMEX choice of (perhaps rivalling) customers and partners- from the East and West
– Slow or Politicking of Oversight: Institutional Oversight slow to approve
– Not meeting with expectations: production, performances, impact, costs ; Infrastructure, water, & Local content/ environmental issues: time, quality, costs
– CSR/ sustainability issues TAX and tax/license changes (Presidential elections 2018).
In the words of a Norwegian state’s man:
1) transparent and predictable conditions for private sector investment and operations,
2) a well-functioning judicial system, and
3) a business environment that is conducive to corporate social responsibility.
Is Mexico ready and open for business with the international energy community?
In the words of US congress research:
It can go well. It can go sour
In my words: we can make or break this in our Relationships and/on our or Results
Now (maybe) the best answer to all this- is our own attitude, behaviour , imagination and intent when we go and come to Mexico.
International business and relationships are best build on trust and mutual respect. Also care for the cultural differences and the subtle ways by which this works,
So the question we may ask in our businesses?
Are we here to serve and help the nation , Mexico, to succeed?
Or are we there for a quick-win, our own gains and credits and don’t give too much about local needs and developments.
In addition- with what Tone of Voice do we speak when in Mexico:
Are we truly carriers of what Energy& Sustainability today ask us to carry as energy professionals- or do we lobby and pay lip-service to some of modern energy architectuers or the CSR/sustainability/climate change demands we have at home
Energy, Sustainability and Sustainable development are – in the minds of my practice- closely interwoven:
This means that everybody counts, that we care for the planet, and we make maximum use of what modern technology and energy architectures can bring us today.
And for that- you may want to help Mexico government and business to create the conditions to do so.
I wish you every business success in these exciting times and endeavours.
Based on the on-going dialogues and conversations around this webinar with our practice- we are considering the option of a dream-team for Mexico.
Companies and partners who would like to receive more information on this opportunity- are kindly requested to mail me in person: AdriaanKamp@energyforoneworld.com
Mexico- Investor Presentation (2012) from Energy for One World Mexican Energy Reform- WhitePaper Columbia University from Energy for One World US Congres Notes on Mexico Energy Reform from Energy for One World UN SDSN Deep Decarbonization Report 2014 Mexico_chapter from Energy for One World Mexico Formal INDC 03.30.2015 from Energy for One World Mexico Energy reform Renewable Energy Roadmap from Energy for One World Mexico Renewables Potential- Academic Paper from Energy for One World