Topic VI cont. - Mexican Energy Markets Flashcards
(20 cards)
Why is Guyana’s oil boom considered risky?
Due to lack of infrastructure and the potential oil curse.
Why might privatizing oil extraction be better for Guyana?
Because they lack expertise and resources to extract oil themselves.
What issues did Pemex face under political patronage?
Incompetent hiring, subsidy burdens, and financial decline.
Why did Mexico subsidize oil prices, and what was the consequence?
To lower prices and boost consumption, but it led to black market sales and Pemex underfunding.
Why are lighter oil types preferred?
They are cheaper to refine into gasoline.
What caused Pemex to lag in exploiting light oil fields?
Lack of financial resources to invest in harder-to-extract fields.
What are the three oil process phases?
Upstream (exploration, exploitation), midstream (storage), downstream (refining).
What are the four types of oil contracts?
Licence, product sharing, profit sharing, service.
What is a licence contract?
Government gives exploration/exploitation rights to a company; the state preserves resources and can tax found oil.
What is a product sharing contract?
The private company joins with Pemex, invests in infrastructure, and shares the oil.
When is product sharing advantageous?
When prices are high, allowing oil storage and speculation.
What is a profit sharing contract?
Company earns a share of profits instead of the oil.
When is profit sharing advantageous?
When prices are low and speculation is less profitable.
What is a service contract?
Pemex pays a fixed fee to the private company for extraction services.
What regulatory bodies were created during Mexican energy reforms?
CRE (energy) and CNH (gas).
What was the role of CNH?
Run bidding processes for private oil company licenses.
What happened to CNH under AMLO?
It was dissolved.
What were the effects of unbundling electricity in Mexico?
Opened generation to private firms, state retained transmission (Cenace), CFE remained sole buyer in distribution.
What was the role of CRE in electricity regulation?
Promised independent regulation, managed market mechanisms.
What did AMLO’s electricity reform attempt?
Prioritize CFE generation over private offers; rejected by the Mexican Supreme Court.
