Mexico takes steps in Energy Reform

The much talked about Energy Reform in Mexico may be on the verge of beginning to deliver. The country has allowed foreign competitors back into the energy market and for the first time in almost 80 years, a private company has sunk a new offshore oil well in Mexican waters.

Bloomberg reports, the joint venture of London-based Premier Oil Plc and Mexico’s Sierra Oil & Gas sees the first offshore exploration well to be launched by anyone other than state-run monopoly Petroleos Mexicanos (Pemex) since the country natrionalized its oil industry in 1938.

Gabriel Anguiano, Head of Strategy & Business Development, Latin America at Probitas 1492, comments “If this joint venture is successful, we can expect an upward trend in private sector investment both from national and international sources.”

“For the insurance industry this signals opportunity beyond the Pemex account, and of course will be a catalyst for insurance and reinsurance mainly for the obvious lines of business – marine, energy, environmental, construction, engineering and general liability, but also a natural overspill effect to other classes and opportunities.”

“Having previously collaborated with Agencia de Seguridad, Ambiente y Energía (ASEA), in the design of guidelines for compulsory insurance as part of allocating tendered exploration and blocks, it’s great to see these changes in the energy market.”

Given the implications for the Mexican market, this is certainly one of the most interesting exploration wells to be drilled in the sector, and one that the insurance industry will be watching with a keen eye.