Mexico presents energy reform progress report

Six months in, Mexico's energy reforms are bearing fruit, with infrastructure projects under way, electricity prices starting to drop and more investment to come, according to sector officials.

The reforms will initially result in US$62.5bn being pumped into sector projects, energy minister Pedro Joaquín Coldwell (pictured) said during a presentation to mark six months since the secondary legislation governing the implementation of the landmark changes was signed into law.

Money will be poured into gas pipelines, blocks awarded as part of the first and second "round one" tender calls and 2015-18 power generation and transmission initiatives, Coldwell said.

With the investment will come more than 200,000 jobs, he added.

The universal power service fund will use funds from surplus generation output to bring electricity to the 2% of the country's population without access, Coldwell said.

Pemex CEO Emilio Lozoya Austin said that the reforms, as a response to the challenges of the 21^st century, will allow the state firm to form strategic alliances. He added that they will lead to increased investment in oil and gas exploration and production, with investment of US$76bn expected in that sector during the "project development period."

He also said Pemex will seek partners to build and refit mid- and upstream infrastructure.

State power company CFE CEO Enrique Ochoa Reza highlighted the reductions in electricity prices that have been achieved as a result of the reforms, and referred to the national infrastructure plan to expand the country's natural gas pipeline network 75%.

CFE, in partnership with Pemex and the private sector, currently has a portfolio of 13 pipeline projects, which will together expand the network 54%, he said.

CFE launched tenders for 12 projects in January and announced this week that in partnership with the private sector it was jointly working on 48 energy infrastructure projects requiring investment of US$11.5bn

CFE, Ochoa Reza said, is also working on a US$200mn conversion of seven oil-fired power stations so that they can also use natural gas. The plants have 4,600MW of installed capacity.

In addition, CFE and the private sector are jointly "promoting" the construction of six natural gas-fired power stations which would cost US$5.75bn and add 4,600MW of installed capacity, as well as 15 renewable energy projects to boost capacity by 2,700MW, at a cost of US$4.8bn.

BNamericas will host its 3rd Mexico Oil & Gas Summit on April 15-16, and its 3rd Mexico Electric Power Summit on May 13-14, both in Mexico City.