Pipeline Companies Look to Benefit from Mexico's Reforms
Pipeline Companies Look to Benefit from Mexico's Reforms
Despite the first bidding failure, Mexico has opportunities to build out its midstream sector - whether through privately organized deals or state-contracted lines, suggests COA’s Eric Farnsworth.
Mike Howard began getting calls from old business partners south of the border soon after he set out to start his own pipeline company.
Howard purchased a network of pipelines moving natural gas from South Texas' Eagle Ford wells in 2011. Mexican businessmen, who knew Howard from his past job at a major energy infrastructure company, encouraged him to try to extend his network south of the border.
Mexico's legislature was about to pass a monumental reform to open the country's state-dominated energy sector. Mexico's manufacturers and power generators were eager to cut fuel costs by getting as much cheap Texas gas as they could....
...Challenges ahead
An auction of 14 offshore exploration properties resulted in only seven bids and two completed deals.
The failure isn't directly related to the pipeline business, said Eric Farnsworth, a Mexico specialist at the Americas Society and Council of the Americas, but as the first milestone of an ambitious reform, the setback attracted a lot of attention.
"That was bracing for Mexican officials," Farnsworth said about the upstream auction. "They realize that there are going to have to be some big changes."
Still, Farnsworth said, Mexico has a lot riding on building out its midstream sector - whether it's through privately organized deals like Howard's or state-contracted lines....
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