(Adds more detail about Pemex's expansion plans)
By Valerie Volcovici
WASHINGTON, April 24 While energy reforms have
opened the door for Mexico's state-run energy company to expand
overseas, its focus for now will be on developing its
"low-hanging fruit," the head of Pemex said on Thursday.
Pemex Chief Executive Emilio Lozoya spoke in Washington,
D.C., at the annual conference of the Export-Import Bank, the
official U.S. export credit agency, on a panel discussing the
next frontier of investment opportunities.
Lozoya, a 39-year-old Harvard graduate, touted the potential
benefits of Mexico's massive energy reform to Mexico's economy,
the central American region and the United States.
Last year, Lozoya said Pemex would set up a new company in a
bid to gain production experience in the United States, in both
shale and deep water projects, but the company has yet to do so.
Pemex currently has a 50 percent stake in the Deer Park
refinery outside Houston, Texas, via a joint venture with Royal
Dutch Shell Plc.
For now, however, Pemex remains focused on attracting U.S.
companies interested in Mexico's untapped potential.
"In Mexico there are many reserves that are accessible
compared to other parts of the world. That does not mean that
Pemex will not go international at some point, but right now the
easier opportunity is in Mexico," he said.
He said Mexico's massive but aging energy sector "needs the
hundreds of companies that are trading in the United States to
come to Mexico."
Not only would that give Mexico a much-needed boost, but it
would be a job creator for the United States, Lozoya said.
Signed into law late last year by President Enrique Pena
Nieto, Mexico's energy reform allows for new contractual options
for Pemex, as well as foreign or private oil companies,
including production-sharing contracts and licenses.
So-called secondary legislation that will set commercial
terms for the contracts and other regulations is expected to be
approved by Mexico's Congress in May.
Lozoya added that the shale gas boom in the United States
also opens up a window of opportunity not only for Mexico, but
for Central America as well.
Various infrastructure projects in the works will allow
Mexico to tap into the bounty of natural gas in the United
States, which will transform Mexico's economy, he said.
"This will mean that we will go from consuming 6 percent of
the total electricity in Mexico to producing 15 percent of it,"
he said, adding that it will move the country away from a
reliance on expensive fuel oil.
"The impact on the economy will be great," Lozoya said,
noting that the energy reform is expected to increase investment
in Mexico to $50 billion to $60 billion per year.
The economic impact could also be felt further south in
Central America, where natural gas is priced around $20 per
thousand British thermal units, compared with roughly $4.50 in
the United States.
"If Pemex together with its partners builds the energy
infrastructure to bring this cheap feedstock to Central America,
we will create economic opportunities in Central America," he
said, noting this could also reduce the major drivers of
(Reporting by Valerie Volcovici; additional reporting by David
Alire Garcia in Mexico City; Editing by Dan Grebler)