China-Mexico Energy Trade Ties in Progress


China-Mexico Energy Trade Ties in Progress

Photo credit: Shaman by Don McCullough

China and Mexico have been at opposite ends for decades, especially since the latter accused the former of flooding the U.S. market with cheap goods that affected the sales of its own. However, now that the Mexican oil and natural gas industry is open to local and foreign investors after over seven decades, China has expressed its interest in investing in the country.

Economy Minister Ildefonso Guajardo told the press earlier in May that China among other countries has expressed its interest in the world’s 10th biggest crude oil producer. “Basically, Singaporean companies, Chinese companies, European companies, Norway, the Americas, the U.S. obviously. There is a lot of interest,” he said.

Earlier in March, a top company executive told Reuters that China’s largest company intends to compete for oil and gas development rights in Mexico. The vice president of the American division of the China National Petroleum Corporation , Gong Bencai, had pointed at Mexico when asked if his country had future plans to invest in Latin America. Gong only said, “Yes, we are ready to participate in the Mexico venture. This is a very big market in the international business.”

Gustavo Hernandez, an exploration and production executive at PEMEX, hinted that such an opportunity will be available for companies like CNPC quite soon. “I think (the first international public tender) is going to happen by the end of this year,” he said. However, government officials had said that they expected the first tenders by the mid of 2015.

Currently, the government is working on detailing secondary laws to ensure investors of the safety of their ventures. The government planned to pass these laws before the last session on April 30, but the opposition disputed these, delaying the process. President Enrique Pena Nieto’s Institutional Revolutionary Party (PRI) hopes to gain approval for the legislation by the end of June.

Meanwhile, the Mexican Ministry of Energy is in the process of evaluating the fields PEMEX intends to keep. The process, which is called Round Zero allocation will last until mid-September for the ministry or until the ministry decides which of the fields PEMEX will keep. Once Round Zero is complete, an annual international bidding session will start all the way until 2019, each offering investors access to about 20,000 square kilometers.

With China’s new ventures in Mexico, CNPC will have a stronger hold over Latin America as it is currently active in Peru, Colombia, Brazil, Costa Rica, Ecuador, Venezuela, Costa Rica and Cuba.

Topics:  China, Energy, Foreign Investment, Mexico, Oil & Gas, Pemex, Trade Policy

Published In: Energy & Utilities Updates, Finance & Banking Updates, International Trade Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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