AbstractsLaw & Legal Studies

One of the main challenges of Mexico is the development of its Petroleum System. A mixture of a bad administration, corruption and a highly restricted juridical scheme has, technically and financially, collapsed the industry. At the present situation, Mexico not only needs foreign and local investors but also experienced players due to a lack of economic resources and technical expertise, especially on deep waters petroleum exploitation. The main legal problem is the Mexican constitutional framework that reserves for the state the monopoly of the petroleum industry, practically in all its areas. In this context, Mexico has had to create some sui-generis models, Multiple Service Contracts and Pidiregas, for third party participation in its restricted petroleum industry with a mild success. These models have raised strong questions on their legality and long-term viability. Nevertheless, their importance and function in the Mexican Petroleum Industry is undeniable. Thus, a juridical study is fundamental to understand their reaches and possibilities for third party participation. On this context, another essential issue would be to contemplate a change in the Mexican constitution, especially on the art. 27 fourth paragraph not only to open the petroleum industry to private players but also to set the legal framework towards the adoption of a more convenient petroleum model. Mexico has the second largest proven crude oil reserves in the Western Hemisphere after Venezuela. In 2006, Mexico produced about 3.25 million barrels per day, 2.3% less than the previous year, equivalent to 77 000 barrels less per day. This information confirms the expected decline in the production of oil. If the production continues at the same rate, with the same petroleum model, the oil would only last for 9 more years. However, Mexico ranked as the world's fifth-largest oil producer, with proven reserves of 12.9 billion barrels. Petróleos Mexicanos (Pemex), the state oil enterprise, is one of the world's largest oil companies, the single most important entity in the Mexican economy, and a symbol of Mexican sovereignty and independence. Constitutionally, Pemex has exclusive rights to oil exploration and production (E&P) that have fostered its position internationally. Nonetheless, Pemex has been suffering years of corruption and a lack of: competitiveness, expertise, investment and new potential discoveries. This scenario can be substantially improved on the medium-term by adopting the correct petroleum model. As a consequence, Pemex needs a structural and qualitative change to meet the economic and energy production expectations of Mexico and the global market. In this situation, it is necessary to look into the international arena to find a convincing and attractive model that would allow the nation to develop its industry into a successful public/private model, the Norwegian License System. Nowadays, Mexico considers the liberalization of its petroleum sector as a fundamental point in its foreign and internal policy due to comprehensible…