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Mexico's First Round of Bidding Offers Lessons

By Robert Grattan

COA’s Eric Farnsworth comments that despite the setbacks and internal challenges, regulators can learn from Mexico’s first bidding round which represents a notable liberalization of its energy sector.

Mexico stumbled with its first auction of oil and gas leases, a panel of energy experts told a congressional committee Thursday, but the missteps weren't so bad that they couldn't offer lessons for next time.

On July 15, Mexico held auction that ended a 76-year state monopoly, offering private companies the first shot at its oil and natural gas reserves. Of the 14 offshore blocks tendered, only two were successfully sold - short of even the modest expectations set by Mexican officials.

In testimony Thursday before a subcommittee of House Committee on Foreign affairs, a panel of four experts on Mexico's energy reform called the auction a disappointment....

.......Despite the setbacks and internal challenges, the four experts stressed that Mexico's liberalization of its energy sector is proceeding at an impressive pace and that regulators can learn from the first round.

"If you're going to have a failure, it's best to have it on marginal properties that are relatively small and not the most attractive ones in deep water later on," said Eric Farnsworth, of the Council of the Americas and Americas Society. "Some of this is working out the kinks in the process...."

Read the full article here.

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