Mexico’s Landmark Energy Reforms Are Mired In Regulatory Delays

Oil firms that have won drilling rights during Mexico’s landmark energy reforms have made little progress on developing about two-thirds of the projects because of the nation’s tangled regulatory regime, according to company executives and government data.

Mexico has auctioned off more than 100 contracts to foreign and local companies since President Enrique Peña Nieto started opening the nation’s oil fields to foreign investment in 2013.

A new oil regulatory framework, much of it adapted from existing rules, has kept most of that oil in the ground, the data show. That’s delaying potential benefits to Mexico and could make the reforms that much easier to unwind if voters elect an anti-reform candidate for president when Peña Nieto leaves office at the end of November.

Securing approvals is a “cumbersome and arduous process resulting in a significant choke point for drilling wells,” said Craig Steinke, chief executive of Renaissance Oil Corp., which has five projects in Mexico, three of them stalled in permitting.