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Breakingviews: Mexico learns from Brazil

Friday, May 02, 2014 - 03:12

May 2 - Reynolds Holding and Christopher Swann discuss how President Enrique Peña Nieto's plan to reform the Mexican oil industry reflects the lessons from Brazil's mistakes.

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Mexico has come up with a plan to reform its oil industry and encourage more foreign investment. And it seems to be learned some lessons from its larger neighbor to the south. Brazil crests along and tell us about that. -- Brazil's real disappointment in 2007. I discovered some mega oil wells right this is meant beat -- to development -- -- unexpectedly though yeah TA. A few years later the team hasn't really materialize and bad outcome hasn't actually gone up a -- between 2010. And 2010 team. Trying to figure they've made a few basic blunders that says the that ten -- opinion yet say that you precedent Bryant is is trying to land from -- and has made a proposal in this proposal is now. Working its way through the system so basically fast 75 years Pemex the state oil company had a monopoly. Right they needed to constitutional reform that changed I think Don that the secondary rules do a couple of things in the monopoly said no foreigners are and is an option but there Ole -- and perplexed -- -- Take that. That sense is that what went wrong in Brazil. With festival they had any -- local contact -- it meant that -- -- foreign -- came in they had to buy more or less half for a bit more than half that supplies from Brazil right facility. Half that much supplies right drilling equipment and and the result is it just slowed everything down right. Now what Mexico has done differently if I -- very much much more lenient local content rules is hanging up to 25 -- And you cannot say he's he's an attack on an almost total bit. Yes I'm using foreign equipment yeah much lower can it be identified so yeah it's not slow at -- and when Brazil's exactly. And a -- the other thing that they've learned from Brazil is that Petrobras again Brazil's state audit state controlled oil company. And I have to be in the driving seat -- all of these projects. Dot rather it's a -- is that human and financial resources -- -- slows them down they didn't have enough capacity to take the lead to of these products. And Mexico's taken the view that foreign companies can take the lead in complex complex wells like Dixie well -- shale wells and where does Mexico. Stand in relation to personal terms of production now yeah. What the measurement. Met Mexican products and has been going down quite considerably for the past ten years there roundabout has two point seven. That million barrels a day to being -- sort of regional rivals. Thanks very very large Jesus well Brazil is a -- news for Dell presents a big critics know this plan. Where does it have to go what what are its prospects. To wind its way through that congress penalties -- -- -- -- an -- majority say this exact coalition building exercise. -- he's done a very good until recently it and pushing through the reforms. He wants through the congress and so it looks as if this -- that's good shot and it does it could be. Could be a real boost for. To production expect okay will be watching to see what happens there in the mean time stay tuned for more breaking views on Monday.

Breakingviews: Mexico learns from Brazil

Friday, May 02, 2014 - 03:12

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