I would like to congratulate CSIS for hosting this event and for promoting a very timely and necessary dialogue. I am very excited to be here and to be able to listen to the experts and understand their points of view on Mexico’s developments on the energy front and where energy in North America is headed.
Last month, I was invited to the Goldman Sachs North American Energy Summit, where I had the opportunity to listen to different perspectives on the considerable economic impact of this “unconventional revolution”. There is a growing consensus that North America has the capability to unlock a great potential and become an energy self-sufficient region in the next 20 years. But there are challenges that we need to address to turn this potential into a reality, including infrastructure, regulatory issues and the shortage of skilled workers in the industry. We have to start thinking as a region about how are we going to address these challenges in order to facilitate this transformation which is within our grasp.
One of the main conclusions of the Goldman Sachs Summit was the importance of having a regulatory framework that is up to date, and that at the same time can be effective in the decades to come. Mexico, with a long overdue package of reforms, has dramatically updated its framework with a series of far-reaching and transformative reforms that will conclude, in legislative terms, with the conclusion of the secondary legislation on energy, sometime this summer.. These structural reforms, encompassing labor, education, telecommunications, financial services, competition policy, fiscal policy and of course, the energy sector, will transform our economy in the years ahead, provided, of course, that implementation is successful.
The energy reform in Mexico is certainly important, but even before it takes place; this sector remains a central component of US-Mexico trade. Let me give you a couple of examples:
- In 2013, United States was the destination of approximately 72% of crude oil exports from Mexico, which arrive via tanker. The value of crude oil exports from Mexico to US is more than two times the value of auto exports ($17.7 billion dollars).
- Mexico was the destination for 44% of U.S. exports of gasoline in 2013.
- Mexico is the third oil supplier to the US, after Canada and Saudi Arabia.
We have benefited from the lower natural gas prices in the US and pipeline exports to Mexico rose by 6%, a record level. Most likely, natural gas demand will continue to grow in all sectors, mainly in industry and power generation, but there is also great potential to use it as a transportation fuel.
Natural gas exports from US to Mexico through pipelines will continue to increase in the years to come. We are expanding the National Gas Pipeline network with two main projects now under construction which will bring natural gas from the US to Mexican territory. Three more projects are scheduled to be in operation by 2015.
Geography has blessed this region with significant energy reserves. According to the latest BP Energy Outlook, North America will be the only region of the world that moves from being a net energy importer to a net exporter. So while China and Europe become more dependent on energy imports, North America is becoming self-sufficient.
- By 2035, North America will be a net oil exporter, accounting for 6% of global energy exports and by 2017, the region will become a net exporter of natural gas.
North America thus has all the necessary energy resources to fuel its economic growth for a long time, and reliable and affordable energy will be a key component in ensuring a very competitive North American manufacturing base.
Through energy reform, Mexico will redefine its role in the energy sector, while the US is adjusting to a new reality as a potential exporter of oil and gas, increasing its energy efficiency, decreasing its consumption and developing technology that has opened new frontiers of energy sources.
This is an exciting time to discuss the future of Mexico and the region.
With our reinvigorated economic engagement with the United States through the High-Level Economic Dialogue (HLED), trilateral initiatives launched at the North American Leaders’ Summit in Toluca last February, international engagement with Latin America through the Pacific Alliance, and with Asia via the Trans-Pacific Partnership (TPP), Mexico´s already significant role in the world economy has strengthened.
Energy Reform is a critical part of boosting prosperity, and along with the reforms currently under way in Mexico and the changes I just mentioned, will be the basis for Mexico to achieve more rapid and sustainable economic growth over the next few years and coming decades.
I am looking forward to hearing your thoughts, so I will just conclude by adding that I am very optimistic about our region opening a new chapter in our shared vision for its future.