Canada, Mexico not energy rivals, ambassador says – by Shawn McCarthy (Globe and Mail – August 14, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

OTTAWA — Shrugging off the notion of an industrial rivalry, Mexican Ambassador Francisco Suarez says Canadian companies will enjoy enormous opportunities as his country seeks to rejuvenate its energy sector with sweeping, though politically challenging, liberalization.

In an interview Tuesday, Mr. Suarez said he expects Canada’s highly developed energy sector to figure as a key partner in Mexico’s multibillion-dollar effort to modernize not only its oil extraction sector but the pipeline and refining businesses as well as natural gas and electricity industries.

“This is the mother of all reforms,” he said at his office a block from Parliament Hill. “I think this opens great possibilities for Canada not as competitors but as complementary economies. I think this offers enormous opportunities for the relationship between Canada and Mexico.”

Mexican President Enrique Pena Nieto on Monday introduced a long-promised reform package which includes constitutional amendments to allow foreign companies to invest in energy production, although it stops short of allowing non-Mexicans to own or control oil and gas reserves. The exact nature of the proposed foreign involvement has yet to be spelled out.

Mr. Suarez said industry players should not underestimate the challenge in winning approval for the constitutional reform, which was derailed before. Former President Vicente Fox attempted similar reforms and failed. Mexico nationalized its oil and gas industry in 1938 – in fact, Mr. Suarez’s father was finance minister and a signatory to the decree at the time. That declaration of independence from foreign – mainly American – oil companies has been a source of national pride for 75 years.

The closed-door policy also choked off investment: Mexico’s oil production has slumped by nearly a third since the middle of the last decade; its oil and gas pipeline system has become sclerotic with some industrial regions unable to get sufficient supplies; it is importing natural gas despite huge resources. Moreover, the country’s electricity system struggles with a lack of capacity and high prices. The government estimates Mexico needs more than $20-billion a year in investment to begin to catch up, even as it has used the national oil company, Pemex, as a cash cow to finance its operations.

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