Paper: Regulatory system governing Mexico’s oil and gas industry needs enhancement

Rice University News & Media

One of the goals of Mexico’s energy reform was to create a regulatory system that would foster competition in a very complex political environment. That system is in place but needs enhancement, according to a new paper from the Mexico Center at Rice University’s Baker Institute for Public Policy.
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“Coordination of the Regulators of the Hydrocarbon Sector: Is It Optimal for the Rule of Law?” was authored by Miriam Grunstein, chief energy counsel at Brilliant Energy Consulting, nonresident scholar at the Mexico Center and professor and researcher at the Universidad Autonoma de Nuevo Leon.
The regulatory framework, known as “coordinated regulatory bodies,” was established in Article 28 of the Mexican Constitution and is intended to oversee and regulate the hydrocarbons sector. Grunstein’s paper assesses whether the new coordinating structure helps to build an industry in a country with proper governance and rule of law.
“The institutional arrangement of the hydrocarbons reform in 2013 in Mexico cannot be understood without analyzing the design and the basic position of its industry regulators, in this case the National Hydrocarbons Commission and the Federal Energy Regulatory Commission,” Grunstein wrote.
“After analyzing the coordinated regulatory bodies, we observe the following: At this very early stage of the implementation of the reform, it cannot yet be stated with any accuracy the direction the industry will take under this new system,” she wrote. “Because it remains very much undefined in the legislation, the Council of Regulatory Agencies of the Energy Sector could have positive effects if it serves as a true channel of communication between the authorities involved in the hydrocarbons sector; it could likewise serve as a means to pressure regulators if inconvenient resolutions are issued. However, it must be emphasized that the law does not authorize this council to instruct the regulators. In any case, if there is any ...

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