Era of nationalising energy assets coming to an end
By Syed Rashid Husain
Published about 5 hours ago
RIYADH: Is nationalisation of energy assets out of fashion, finally?
Monopoly of Mexico’s state-owned Petroleós Mexicanos’ (Pemex) on the energy riches of the country has come to an end. On Aug 11, Mexican President Enrique Peña Nieto signed a bill into law ending the 76-year state control over the country’s vast oil and gas resources.
The new law introduces profit- and production-sharing contracts for foreign companies, as well as licences that allow companies to be paid with the oil and gas that’s extracted in mining projects.
As per details, Pemex would be allowed to keep 83 per cent of the country’s proven and probable reserves, including current oil fields and discoveries awaiting development. However, Pemex will only be permitted to keep about a fifth of prospective resources, including the as-yet undiscovered deposits. Pemex had initially requested for 31pc of prospective resources.
Upon the passage of the bill, Nieto underlined optimism. “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 energy security.”