The Energy reform introduces a deep transformation of the oil and electricity sectors in Mexico that will increase productivity and the quality of energy products and services for the benefit of all Mexicans. This will translate into an additional contribution to economic growth, a greater availability of oil and gas, as well as a better electricity provision service comprising a wider coverage and more competitive prices. The energy reform advances a new energy model based on the principles of competence, openness,transparency, sustainability and long term fiscal responsibility. It will therefore contribute to the creation of a more competitive and prosper Mexican economy. The main components of the recently approved and enacted energy reform bill are the following: o The reform opens the energy sector to competition in order to attract private investments that may broaden the national oil production capacity. In order to make this possible, the constitutional reform and the secondary legislation create a flexible contractual model through which PEMEX, the national oil company, as well as private enterprises will be able to associate
in the exploration and extraction of oil and gas, while State ownership of hidrocarbons will prevail. o So that it may thrive, Pemex was provided with a new corporate structure, with technical and administrative autonomy, as well as a fiscal regime that is much less onerous than it used to be so that it can channel more financial resources for investment and its own development. o Also a wider private participation will be allowed in the National Electricity System in order to increase efficiency in electric power generation and facilitate the expansion of the wholesale market. This will reduce the cost of electricity services for consumers, foster the transition towards clean energy and expand the system’s coverage to all areas. As in the oil sector, transmission and distribution activities will remain state owned and controlled but private participation will be allowed through contracts. The Energy Reform aimes at attracting investments and modernizing the energy sector in order to: o Contribute to the household economy by diminishing the energy prices, in particular those of electricity and gas. Also more quality jobs will be created and a better service in the provision of fuels will be provided.o Promote social development, as a significant part of the oil rent will be directed at social spending, long term savings, scholarships and technology development projects. o Contribute to environmental preservation and protection as the generation of clean and renewable energies will be a priority. o Increase transparency in the energy sector so that the general public can verify the income and flows of ressources from and into it as well as its use for national development goals.o Increase the general country competitiveness by reducing energy prices while modernizingPemex and the National Electricity Company. Embassy of MexicoKingdom of Saudi Arabia Al Fazaari Plaza C-9, Diplomatic Quarter. P.O. Box 94391 Riyadh 11693, Kingdom of Saudi Arabia Ph. +966 1 480 8822, Fax +966 1 480 8833. E-mail: embassyofmexico@embamex.org.sa , http://embamex.sre.gob.mx/arabiasaudita/o Increase Mexico’s industrial productivity, by increasing the availability of low cost energy inputs produced in the country while enlarging energy exports and diminish dependence of imported energy products.Main goals of the Energy reform in numberso Achieve restitution rates of proved oil and gas reserves of 100 percent or more. o Increase oil production from 2.5 million barrels a day to 3 million in 2018, and 3.5 million in 2025. Likewise, increase production of natural gas from 5700 million cubic feet daily to 8000 in 2018 and 10,400 in 2025. o Contribute with one percent GDP growth in 2018 and two percent in 2025. o Create over half a million additional jobs over the next five years, and about 2.5 million jobs in 2025. o Substitute the most polluting electricity central plants with clean technologies and increase the use of natural gas in electricity production.With unity of purposes, in months we overcame decades of immobility: President Enrique Peña NietoWhile enacting the secondary legislation of the Energy Reform, President Enrique Peña Nieto stated that “thanks to the unity of purposes, in months we overcame decades of immobility; the barriers that prevented Mexico from growing in an accelerated and sustained manner have been knocked down.”During the event, held in the Main Courtyard of the National Palace, the President declared that, once the legislative process was completed, “we reaffirm that the Energy Reform preserves and assures the nation’s property over Petróleos Mexicanos (PEMEX), the Comisión Federal de Electricidad —Federal Electricity Commission (CFE)—, hydrocarbons in subsoil and the oil revenue.He noted that “with this Reform we can extract deepwater oil and more effectively use our great shale deposit to obtain gas that allows us to generate electricity at a lower cost. The country will reduce its dependency on foreign supplies and will guarantee its energysecurity”.After acknowledging federal lawmakers for “their splendid job in achieving and making this important Reform a reality,” President Peña Nieto said that this changes will translate in concrete benefits for families, both at the city and at the countryside, as well as businesses, especially small and medium enterprises. President Enrique Peña Nieto reaffirmed that “the Energy Reform is also a green reform because it promotes the use of cleaner fuels such as gas, which pollutes 70 per cent less than oil. It will also allow the production of energy based on renewable sources like solar, wind power, and geothermal energy.”The head of the Executive Branch emphasized that “this is the moment to put the Energy Reform in action so the majority of Mexico can receive the benefits this landmark reform brings”. Consequently, he announced ten concrete actions, in the short and medium run, to achieve this goal.WITH THE ENERGY REFORM, THE PRESIDENT AND CONGRESS HAVE WIDENEDTHE PATH FOR THE FUTURE: PEDRO JOAQUÍN COLDWELLSecretary of Energy Pedro Joaquín Coldwell expressed that “with the Energy Reform, the President and Congress have widened the path for the future.” He also claimed that with the enactment of the Secondary Legislation of the Energy Reform, “this day is a watershed, a before and an after in the energy paradigm experienced for the past decades.”A change in the way in which we relate our national identity to energy, which will now correspond to the realities of the twenty-first century, and the environment in which the Mexicans of this generation develop,” he said. Secretary of Energy Joaquín said both the CFE and PEMEX strengthen, as they no longer function as decentralized public bodies and now become 100 per cent State-owned productive enterprises, with the objective of becoming strong, sound, and competitive public companies.He noted that the Energy Reform will generate major transformations in two aspects; first, that the hydrocarbon industry has the capital and technology to access deepwater and unconventional resources, and second, that the electric industry operates through an energy market involving public and private companies participating on equal terms. ENERGY REFORM IS A PROFOUND CHANGE BETWEEN OUR NATIONAL ENERGY AND PUBLIC FINANCE: Luis Videgaray Caso Secretary of Finance and Public Credit, Luis Videgaray Caso noted that the Energy Reform “is a profound change in the relationship between our energy and national Treasury. It is a radical reform of the tax treatment of oil, gas, and electricity. “He highlighted three key aspects in fiscal and budgetary fields, arising from the Energy Reform: First. The financial strengthening of PEMEX and the CFE. The aim is to strengthen PEMEX in the face of the competition it will encounter, just as the CFE in the creation of a new electricity market.Second. Oil revenues and income for the Mexican State. The Energy Reform, “in addition to generating, among other benefits, more investment, more jobs and paying reliable and cheaper power supply, will allow us to resume growth in the production platform.” Third. The creation of the Mexican Petroleum Fund, “which will aim to ensure that present and future generations of Mexicans, who are the owners of the oil revenue, receive the income for the good of the country. This Fund was constituted as a trust in the Bank of Mexico with a majority of independent counsellors”, he said.THE ENERGY REFORM OPENS GREAT POSSIBILITIES TO MEXICO AND TRANSFORMS IN DEPTH THE ENTIRE SECTOR: GUSTAVO MADERO The president of the National Executive Committee of the Partido Acción Nacional, Gustavo Madero Muñoz, said: “The Energy Reform enacted today opens great possibilities for Mexico; opportunities that had been denied for decades”. The reform transforms the entire energy sector to compete globally, improving the quality and price of products and services, increasing the investment and job creation.”It is a paradigmatic reform, in its form and content, and in a particular way it opens a new era for the energy sector, and for our entire country,” he said.The reform ensures the national sovereignty over the ownership of hydrocarbons; opens the sector to private investment under models that maximize oil revenue; modernizes and strengthens PEMEX and the CFE as productive state enterprises with full autonomy; creates a competitive and efficient energy market, and defined strong and clear regulatory bodies.”These are the tools that our country needed for years for the energy market, they will benefit all Mexicans,” he said. THE ENERGY REFORM IS HISTORIC BY ORIGIN AND SIGNIFICANCE: CÉSAR CAMACHOThe president of the National Executive Committee of the Partido Revolucionario Institucional, César Camacho Quiroz, emphasized that the Energy Reform is historic by origin and significance and is the most transformative for the country. “This is a social vocation Reform because the State will not only keep ownership of the hydrocarbons, but reaffirms its rectory in strategic areas, ensuring that oil wealth will lead to prosperity for all”, he said.The reform will derive transcendental changes to ensure that Mexican companies have sufficient fuel at prices that make them competitive, and allow them to have greater resources that benefit the most vulnerable population with the support of social, education and development programs.”The economy will be strengthened. Our productive plant will be modernized and more environmentally friendly. Our energy sovereignty is consolidated in a climate of transparency”, he said.