FULL SPEED AHEAD

Mexico 2017 | ENERGY & MINING | INTERVIEW

TBY talks to Pedro Joaquín Coldwell, Secretary of Energy, on liberalizing the retail fuel market, the success of the energy reforms, and objectives for 2018.

Pedro Joaquín Coldwell
BIOGRAPHY
Pedro Joaquín Coldwell has a degree in law from the Universidad Iberoamericana, and was a Professor at the same university over 2001-2006 in the department of political and social sciences. He has been an active member of the Institutional Revolutionary Party (PRI) for many years, serving his home state of Quintana Roo at the state and federal level, as well as serving as one of its senators from 2006-2012. Among his numerous posts, Coldwell has served as Mexico’s Ambassador to Cuba and headed up the Secretariat of Tourism (SECTUR) and the National Fund for Tourism Development (FONATUR).

Why is the liberalization of the retail fuel market important for the Mexican energy sector?

In the last 13 years, Mexico increased its consumption of fuels; we went from being the eighth-largest global consumer of gasoline to the fourth largest. At the same time, for almost 80 years the development of infrastructure for storage, transport, and retail of oil products was subject only to Pemex's investment capacity. This led to the transport and storage system becoming insufficient to satisfy our increasing needs; today, we have barely three days' worth of inventory capacity. This is far below the international recommendation of at least 30 days and compromises the country's energy security. In logistics, the pipeline network to transport oil products has not been expanded in the past 17 years; therefore, we have been compelled to resort to other means to move fuels as auto-tanks, which is 14 times more expensive. Additionally, the number of service stations per inhabitant is low, compared to other countries. With the liberalization of the fuel and oil products market, we seek to create a competitive and robust market comprised of private investors and that coexists with Pemex. This opening will bring to Mexico three specific benefits: strengthening our energy security as a result of the extension of our storage capacity; allowing Mexico to rely on a more efficient, secure, and competitive transport system that will allow us to streamline logistics costs; and the ability to offer consumers a wide variety of quality options, services, and brands of gasoline stations.

Three years after the initial implementation of the energy reform, how would you characterize its success? Has it brought about the desired economic effects?

The successful results of the energy reform are a reflection of the confidence of the new operators in our regulatory framework, which guarantees legal certainty and a favorable environment for the developing projects. We have achieved joint investments in both sectors for about USD70 billion from 112 companies, which will invest in the development of oilfields, seismic research, expansion of the natural gas transport system, and clean electric power stations. These investments promote the participation of multiple stakeholders, and stimulate the construction of productive infrastructure that fosters economic growth, competitiveness, and the creation of high quality jobs. This also offers consumers the opportunity to choose the supplier of their preference.

In early 2017, you signed an agreement with your US counterpart to ensure the reliability of the interconnected Mexican and American energy grids. Why is this important for both countries?

The agreement signed on January 7, 2017 established the basis and framework for an important technical collaboration between regulators of both nations, independent electric systems operators, and authorities responsible for the design of public policies, among other relevant actors who will guarantee the reliability of our electrical interconnected networks. The exchange of information and adoption of best practices will strengthen energy security in the region. Today, this line of work is being assessed as a priority by Mexican authorities along with the new administration of the US.

What are your goals for Mexico's energy sector between now and 2018?

The main objective for 2018 is that processes unchained by the energy reform are set in full motion, and its benefits are consolidated regarding employment, human capital formation, new perspectives for young people, the re-boosting of regional development, as well as being able to introduce to the Mexican energy market new products and services that provide consumers more opportunities to choose who they are buying from and at what cost. To achieve that, we will continue focusing our efforts in four main elements: sparking greater public and private investments in hydrocarbons and electricity, consolidating the energy markets, stimulating new supply options for end-users, promoting clean energy in order to reach clean-power generation national targets, and expanding the National Gas Pipeline Network in order to provide this more efficient and less contaminating fuel to more regions of the country.