reproduced from the Daily Oil Bulletin
article by Carter Haydu
North American Free Trade Agreement (NAFTA) renegotiations offer a chance for Mexico to update its relationship with Canada and the United States on energy issues, which were of limited importance to Mexico in the original 1992 deal, a forum heard Tuesday.
“It is quite important to note there is no chapter for energy because Mexico at the time could not take any investment into the hydrocarbon value chain, or into electricity and power generation,” David Madero, chief executive officer of National Control Center for Natural Gas, Mexico (CENAGAS), told the University of Alberta forum at the Global Petroleum Show.
“This has changed dramatically in the last 20 years, and therefore today there is a big opportunity where we could have a very strong, very stable chapter on energy, which will allow us to increase the amount of integration we have.”
He added: “Mexico is an importer of natural gas and it exports oil, and we import a lot of gasoline and liquid fuels. We have an opportunity to integrate further with the United States and with Canada.”
In 2014, President Enrique Peña Nieto signed into law a framework for private investment, ending a 75-year state monopoly, before opening reserves to foreign oil companies. Jim Ellis, president and CEO of the Alberta Energy Regulator (AER), said his organization has worked with its Mexican counterparts as they develop their regulations following those historic changes to Mexico’s energy sector.
“As they move into the real opportunity in that country for unconventional shale in the north part of the country, they are looking to Alberta and the [AER] for assistance in building out their shale opportunities.”
Formally partnering with the International Centre of Regulatory Excellence (ICORE) through a memorandum of understanding (MOU), the AER will work collaboratively, share information and expertise, and build an international community dedicated to regulatory excellence.
“That centre is designed by regulators for regulators in order to assist the AER to work in that Mexican space, and work with our regulators over the next number of years,” Ellis said. Although Mexican technology and resources are similar to those in Canada and the U.S., Canadian and American companies looking to do business in Mexico are concerned about the country’s regulatory processes and ability to make energy decisions.
“We are doing significant work between [the] AER and multiple regulators in Mexico to see the alignment and to see where we can learn from one another, and where we can in Alberta add value into Mexico.”
Regulatory matters aside, David Rosales, director general, minister of energy, Mexico (SENER), told the forum that ensuring Mexicans have the necessary education to properly exploit their hydrocarbon resources post-monopoly is also a key issue, as the country aims to better understand the markets and international environment.
“Mexico had a very good set of engineers, but it was a very small set, and it was clearly concentrated in a couple of institutions, plus Pemex. This wasn’t enough. It was clear to us that we had to figure out the best way to develop new human resources for our country, so people could be prepared both technically and financially in order to understand and overcome the challenges we were having.”
For its part, the U of A is helping Mexico overcome those challenges. David Turpin, U of A president, led a delegation to Mexico in March, announcing a $14-million research collaboration that includes $4.4 million to improve Mexico’s understanding of oil and gas flows in naturally-fractured reservoirs, $5 million to develop upgrading and transportation processes for heavy oil, and $5.2 million for professional development opportunities.
“This project we are having with the university is creating not only great opportunities for the Mexican people to come to Alberta to get a better glimpse of how to develop new infrastructure, but it is also a way in which we will be able to take a better view from a global perspective,” Rosales said. “That is what a project with such an awarded institution can bring to the table.
“Ultimately, we all want to have the best people prepared in every part of the supply chain and in every part of the value chain, from each of the markets we are stepping into.”
Mexico has awarded the U of A and University of Calgary more than $60 million towards various research grants, according to Alberta Energy Minister Margaret McCuaig-Boyd. She said: “I sincerely hope all these opportunities and agreements we are working on will benefit the people of Mexico and Alberta, and I am confident that this is just the start, and we can continue to grow in strength in our relationship.”
Last fall, McCuaig-Boyd travelled to Mexico as part of an Alberta trade delegation. She noted that the Mexican midstream mission involved 20-plus Alberta-based companies looking to do business in Mexico. The energy minister said Alberta is planning a second trade mission to Mexico in autumn of this year, with expectations Alberta firms can find increasing opportunities in the Mexican energy business.
“Alberta has vast resources of natural gas and refined petroleum products that are in demand in Mexico and we are all so eager to discover what other opportunities exist for Alberta and Mexico to grow in this two-way trade. Increased investment between us is the next step in this relationship.”
She added: “The United States will always remain an important market for both our countries, but we would be remiss if we didn’t explore additional opportunities as well.”