Wednesday, February 5, 2014

Energy reform positive

Wednesday, 05 February 2014 00:10
THE NEWS
 
The energy reform passed at the end of last year is a positive factor for Mexico’s long-term economic prospects and for the credit rating of state-run oil company Pemex, while the Federal Electricity Commission (CFE) could experience margin pressure, Fitch Ratings reported on Tuesday.

Fitch Ratings released a report saying that the reform will overall be good for competition in Mexico and is expected to increase oil production by Pemex, which it said has been unable to properly explore the country’s oil deposits due to undercapitalization.

The rationale behind the energy reform is to reverse Mexico’s declining oil and natural gas production by allowing for private investment in the country’s state-run oil sector.

“Fitch does not expect Pemex’s ratings to change due to the energy reform, but the company will benefit from the ability to find partners to share exploration risks and budgetary independence,” said Fitch analyst Lucas Aristizabal.

“The CFE will remain strategically important with its linkage to the government continuing to support ratings,” he added.

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