Early last year, two studies brought us face to face with
Petrobras and PEMEX. Both market
opportunity projects were commissioned by global OEMs interested in selling
product into the oil & gas industry.
In Brazil, we green-lighted the opportunity and highlighted strategies
most likely to result in sales success with Petrobras: (unique and
differentiated product, an understanding of local content laws and local business practices, climate
considerations, regions incenting investment and exploration, etc.). The bid process in Mexico looked reasonable
on paper.
But the reality was not reasonable, not simple, and
typically resulted in failure. Barriers
erected to keep global companies out and PEMEX’s failure to invest in energy
infrastructure resulted in serious underperformance of the Mexican energy
sector. We suggested to our client that
liberalization of Mexico’s energy sector needed to occur before concerted
efforts were warranted. A national effort
to open energy markets to foreign investment, a new level of transparency in
bid process & procedures, and a detangling of the norms and standards and
sales practices that effectively barred foreign participation would create a sea change in Mexico.
Fast forward six months to December 2013. Mexican President
Enrique Peña Nieto signed legislation enabling foreign companies to drill for
Mexican oil in partnership with Pemex.
Then, in July 2014, Mexico's Senate voted in favor of a new
Electricity Industry Act. Background: the Federal Electricity Commission (CFE), a
state-owned utility, required private generators to sell all their output to
CFE: a system that handed the government
control of electricity pricing. The new law (which is still working its way
through the system) creates a National Center for Energy Control and requires that
generation and sale of electricity services are to be provided within "a
system of free competition."
Who’s excited?
This is a win for oil & gas and energy sector manufacturers/service
companies, and for Mexico.
The party is just getting rolling...
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