Photo credit: Foggy Bottom Pump Jack – Duncan, Oklahoma by duggar11
When it comes to energy opportunities, Mexico right now is a very hot market indeed for companies that export oil and natural gas; furthermore, if the present federal government, headed by President Enrique Peña Nieto can manage to break the monopoly that Petróleos Mexicanos (PEMEX) has enjoyed since the 1930’s, it’s possible that Mexico will require infrastructure investors and technological expertise in the oil extraction industry.
This week, Mexican Senate approved the National Strategy for Energy, which will include the objectives for years 2013 to 2027. Nevertheless, President is lobbying for an energy reform to come during last 6 months of year 2013 to the Congress.
The current situation in Mexico is this; there are plenty of opportunities for U.S. or other natural gas and oil suppliers to export product to Mexico. In fact, there is, at this very moment, a proposal to build a 124-mile pipeline to transport natural gas from the Eagle Ford Shale area (Texas) right to the Mexican border. The company building the pipeline will be the Houston-based NET Midstream.
It is well known that Mexico does have very large reserves of natural gas, however, development of infrastructure has not been able to keep up with the country’s demand and consumption, so, for the next while, Mexico will need to import energy such as natural gas until the infrastructure is built. To give an idea how big the potential market could be, energy consumption in Mexico has grown at four times the pace of its economic growth several times in the past ten years. The domestic industry simply cannot keep up.
Because Mexico’s automotive industry is growing at a very brisk rate, with vehicle production expected to top 4 million units by 2018, the country does not have the luxury of asking companies to cut back on energy consumption; it is needed to keep the economy growing and it’s needed to lift even more people out of poverty.
Therefore, natural gas exporters should see if they can sell their product to Mexico; and companies with expertise in natural gas infrastructure could perhaps act as consultants to PEMEX, or sell directly within the limits of the law, so the country’s infrastructure will be able to handle the domestic demand.
Other energy opportunities exist in the solar energy market. Since 2011, the price of existing solar technology has gone down about 30%, meaning that panels will be cheaper to produce and will be affordable for many to buy. Because the taxes on energy have gone up by 25% in some cases, people cannot afford electricity from the national grids. However, it is exactly this group of people that would be potential solar panel clientele. Solar panel suppliers and retailers may do very well in the Mexican market; furthermore, because Mexico receives more than its fair share of sunshine, the country would be a good place to conduct research and development, along with manufacturing.
Mexico has a potential 71,000 Megawatts versus 1,214 Megawatts installed. Wind generates 77% of the total electricity generated through renewable resources. By 2025, it is expected to increase capacity to 11,267 MW.
In relation to foreign investment, by 2012, Mexico received accumulated investments of around US$6.902 billion in the renewable energy industry, which was concentrated in States of Guanajuato, Oaxaca and Baja California; and coming from Spain, the United States and France, mainly. These investments were made in wind farms, as well as plants for manufacturing generators, paddles, towers and other components.
Wind-generated energy is sold to the Government (usually sold through tenders) or generated by industrial companies for self-consumption. Opportunities for builders and engineering firms are open.
The current Federal Government is looking to open oil industry to private sector. Due to a lack of capital, vast reserves in the country are going untapped. If the industry opens, investment in infrastructure, technology and skills could be responsible for 1.6 mbd of petroleum in the next 15-20 years. If private investment is allowed, the opportunities for investment will be massive.