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Mexico’s Pemex Must Improve Transparency, Study Finds

Mexico authorities must address a discrepancy between the level of transparency shown by national oil company Petróleos Mexicanos (Pemex) and that of national hydrocarbons commission CNH, the latter said Wednesday.

Citing a new study on the matter by Mexico’s Centro de Investigación y Docencia Económicas (CIDE), CNH said in a statement that “there is little transparency” in Pemex’s administration of the oil and gas acreage it was allocated through the country’s 2013-14 energy reform.

By contrast, CNH said, the study showed that CNH has gone “beyond the legal mandate” for transparency with respect to a series of bid rounds it has overseen under the reform.

The findings directly contradict the rhetoric of leftist President-Elect Andrés Manuel López Obrador, whose administration is currently reviewing the 107 contracts awarded through the rounds for “irregularities.” López Obrador has said that he will suspend the bid rounds, pending the results of the contract review.

His energy advisers have also advocated for legislation to give Pemex more autonomy in selecting joint venture partners to develop the allocated acreage, which was given to Pemex through a process conducted ahead of the bid rounds called Ronda Cero, or Round Zero.

Round Zero gave Pemex control of 83% of Mexico’s proved plus probable (2P) reserves and 21% of its prospective reserves, with the stipulation that Pemex and its partners meet investment requirements at the blocks by August 2017, a deadline that was extended by two years.

“There is an asymmetry of transparency between the information available about the allocations to Pemex and the information available with respect to the contracts awarded in the framework of the energy reform,” CNH said.

The findings of the study corroborate earlier research by the Natural Resources Governance Institute, which has warned that transparency gains made through the reforms could be undermined by the incoming administration.

Gas Contract Release Program Advances

In related news, Mexico regulators approved the final phase of a program that requires Pemex to cede up to 70% of its natural gas marketing contracts to third-party shippers.

The approval, announced by the Comisión Reguladora de Energía (CRE) on Friday, represents a step toward further liberalization of Mexico’s nascent natural gas market, despite the nationalist energy rhetoric of López Obrador, who was elected July 1 and will take office Dec. 1.

The contract release program, approved by CRE in January 2017, is “an instrument that promotes the entrance of new participants to the natural gas industry to the benefit of the electric, industrial, services and residential user segments,” the commission said in a statement.

The program’s first phase was a success, resulting in the release of over 30% of Pemex’s 3.56 Bcf/d marketing portfolio, well above CRE’s 20% goal for the initial stage.

As a result of the appetite demonstrated by shippers to acquire the contracts, CRE combined the originally planned second and third phases into a single final stage.

The program requires Pemex to make available 70% of its contracted volumes to third-party shippers within four years, starting from the original January 2017 approval. 

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