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Interview with Luis Miguel Labardini, Partner, Marcos y Asociados Infraestructura y Energia S.C

Luis Miguel Labardini talks to AMM Events about Mexico’s energy reforms, the future of Mexico’s energy industry, the Government’s role as a regulator, and the economics of renewable energy

AMM Events (AMME): Why did Mexico make the decision to reform its energy sector?

Luis Miguel Labardini (LML): The decision to reform the energy sector is due to the fact that it has been very clear for at least thirty years that to have monopolies in the sector was becoming a burden and a barrier to an efficient energy market and to economic growth. A Constitutional change was required, and the previous governments did not have the political capital nor the votes in Congress to pass the required bill. Petroleum in particular has been historically a very sensitive issue, and the Mexican political system had been reluctant to invest political capital in making a constitutional change that was very controversial at the time.

AMME: What has the opening of Mexico’s energy market meant for Mexico and what directions could we see the energy industry take in the next five years?

LML: The opening is resulting in the creation of efficient markets in all areas of the Energy Industry, including the incorporation of more than 60 new operators in exploration and production of existing and new oil and gas fields, the normalization of the fuels market, promoting efficiency and investment in logistics and infrastructure, and notably, the appearance of many new power generators, particularly generators using renewable sources of energy. In the oil and gas sector, investment is taking more time to implement, because it takes several years for oil and gas operators to begin producing new barrels. The full impact of the reform will only be perceived in its real dimension in the medium and long term.
The changes resulting from the Reform is resulting in efficient markets, and eventually, in significant investments, adequate supply of energy, and competitive prices derived from a better allocation of resources.

What role does the Mexican government have to play when interacting with private companies?

LML: The role of the government is very important as a regulator and as a promoter of efficiency in the markets. In the last two years we have witnessed a myriad of new regulations required to structure the new business environment. Some players, particularly in the
exploration and production sector, consider that the government agencies are over regulating their activities, and adding unnecessary costs to their operations.

AMME: Is now a great opportunity for Mexico to invest in renewable energy?

LML: The economics of renewable energy have improved significantly. A large proportion of the generation capacity being built in Mexico right now will be wind and solar power. What we are witnessing in Mexico today is no less than an energy revolution.

Luis Miguel spoke at the Mexican Steel Forum in 2018.

This content is provided by AMM Events for informational purposes only, and it reflects the market and industry conditions and presenter’s opinions and affiliations available at the time of the presentation.