A new catalyst bringing the three together has been Mexico’s program of energy reform, intended to break the hold of state-owned Pemex on its industry and bring new private investment to Mexico’s energy industry. The decline in big part was due to a lack of investment by the government in Petroleos Mexicanos, and its increasing reliance on the Pemex revenue stream for its own budget.
Pascual said Mexico has made rapid advancement in bringing in foreign capital and partners to open up its industry. “They have every single super major engaged in a deep and serious way, principally in deep water and shallow water projects,” he said, adding there have already been two significant finds in shallow water, including one by ENI and another by a consortium of companies including Talos Energy and Premier Oil.
But Citigroup North American economist Dana Peterson said energy could become a political football. For instance, Mexico could rely on its own oil resources to displace some of the U.S. natural gas it is now buying, but she does see a 60 percent chance a new NAFTA deal will be approved.
Juan Carlos Hartasánchez, Albright Stonebridge Group senior director, said energy isn’t a big enough common interest to bring the NAFTA negotiations together but it could help. Mexico’s transition makes the North American energy picture even brighter, he said.
“Now Mexico has opened its energy sector to private investment, there’s a lot of opportunity for both Canadian and U.S. companies that want to invest and trade in energy,” he said. “The modernization of the energy chapter would be one of those chapters that Mexico, the U.S. and Canada would win from. Part of the idea was to have NAFTA be energy self-sufficient and an energy powerhouse simply because the resources exist.”
Pascual said the original NAFTA is preferred by the energy industry because it has a provision for arbitration of disputes. Under the new U.S. proposals, companies could end up in courts instead.
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