Mexico, Shale, and the U.S. Energy Boom Take Center Stage at La Jolla

Mexico, Shale, and the U.S. Energy Boom Take Center Stage at La Jolla

LA JOLLA – Energy reform in Mexico, the energy boom in the United States, the role of natural gas, and Latin America’s unconventional resource potential dominated the discussions over the two days of the XXIII annual La Jolla Conference on May 21-22.

Almost two hundred participants from across the Western Hemisphere participated in this year’s conference that featured addresses by senior officials from Pemex, the Panama Canal Authority, Mexico’s national hydrocarbons agency CNH, Argentina’s YPF, Mexico’s ministry of energy and Perupetro, as well as discussion panels with thought leaders from across industry, academia and the energy consulting world.

The optimism and hope for a new energy future in Mexico were evident throughout the course of the discussions, as was the interest in the continued march of the U.S.’s oil and natural gas production boom. Less clear was if and how Latin America would be able to replicate the U.S.’s model for its energy renaissance.

The sheer magnitude of the U.S. energy revolution began the conference discussions and set the stage for much of the following discourse. Panelists’ proffered figures that underscored today’s energy panorama: total growth in production has been equivalent to growth in all OPEC countries combined. Pennsylvania’s natural gas production alone was 1.5 times the size of Qatar’s, and may soon surpass that of Russia.

Latin America’s unconventional resource potential was not disputed, but among many optimistic outlooks several panelists cautioned that the regulatory environment, development costs, access to capital, local infrastructure and overall efficiency of shale projects must be improved. Indeed, the caveats all seemed to focus on the elements above ground facing the region’s incipient shale wave.

Though it might take longer than expected – many anticipate the revolution to take about a decade to spread across Latin America – there was near consensus that the resources would be developed and serve as important domestic sources of energy as well as boost economies from Mexico to Colombia to Argentina.

An important tangential discussion to the shale and U.S. energy boom was the revitalized interest and potential for natural gas and particularly the role for liquefied natural gas (LNG) in the hemisphere. Indeed, many panelists argued that the U.S. could become the largest LNG supplier in the world, with the US Gulf of Mexico an ideal place for a new hub. Some also foresaw an eventual convergence of global LNG prices as soon as 2018.

Institute of the Americas energy policy associate Alexis Arthur moderates a discussion of natural gas and LNG issues in the hemisphere with panelists Manuel Benitez of the Panama Canal Authority, Ricardo Iglesias of GDF Suez, and Jed Bailey of Energy Narrative

The Panama Canal’s long awaited expansion will play a vital role in making LNG exports competitive, and the Canal may be instrumental in making the region a new LNG hub.

The expanded waterway will reduce LNG transit time from Trinidad & Tobago to Chile by over 6 days and cut over 8 days off the time required to move LNG from Peru’s Camisea project to Spain.

Across Latin America demand for natural gas and LNG has boomed; growth in demand has outpaced GDP growth. Latin America’s appetite for gas will continue to grow because of economic expansion, increased power generation, and fuel switching.

But it was perhaps Mexico’s monumental energy reforms that truly animated many of the discussions. Updates on the reform process, with secondary legislation set for debate soon after the conference, were shared by representatives from all facets of the government and industry.

Presentations of Pemex’s evolution and the role of the revamped national hydrocarbons agency engendered a series of debates. When asked how the revamped national oil company would partner and develop projects, the head of the firm’s E&P company outlined the transition to a productive state enterprise and argued that partnerships could be announced by the end of the year.

Representatives from a wide range of international companies were eager to hear from and meet with Pemex officials on the sideline of the conference.

Similarly, the state power company CFE set forth plans to further evolve into a natural gas player, highlighting several midstream projects being developed that would also include new collaboration and partnering opportunities for private firms from across Mexico and the world.

Chinese Executives Attend IOA’s Two-Week Program on Doing Business in Latin America

Chinese Executives Attend IOA’s Two-Week Program on Doing Business in Latin America

LA JOLLA and MEXICO CITY – The Institute of the Americas held its first annual Chinese Professional Executive Workshop titled “East Meets West – An Introduction to Latin America” from May 5-16, 2014.

This two-week workshop was co-organized by the Institute of the Americas and the Institute of Latin American Studies at Chinese Academy of Social Sciences (ILAS -CASS), and sponsored by Development Bank of Latin America (CAF), Vera & Associates, HSBC and Chadbourne & Parke. ChinaGoAbroad from Beijing was the collaborator of the Institute of the Americas on this workshop.

The 2014 program focused on Mexico’s energy reform and secondary regulations, with speakers including Luis Vera, founding partner of Mexico City-based Vera & Associates; Rachel Bierzwinsky, counsel with Chadbourne & Park in New York; and Antonio Borja, attorney with Galicia Abogados in Mexico City, and Institute Energy Program Director Jeremy Martin, as well as economic experts from HSBC Mexico and Deloitte.

During the first week of the program at the Institute’s campus in La Jolla, Chinese executives heard presentations on key Latin American countries including Mexico, Cuba, Chile and Brazil.

Associate Vice Chancellor for Public Programs and Dean of Extension at the University of California San Diego (UCSD) Mary Walshok was the keynote speaker on the opening day of the program.

Ambassador Bruno Bath, Consul General of Brazil in Los Angeles, spoke about business opportunities in Brazil. Francisco Correa, Trade Commissioner in ProChile’s Los Angeles office, spoke about innovative approaches to doing business in Chile. And Richard Feinberg, Professor at UCSD’s Graduate School of International Relations and Pacific Studies, presented his research on Cuba’s emerging entrepreneur and middle class.

Antonio Maldonado, a San Diego-based attorney who specializes in U.S. –Mexico cross-border litigation, spoke about ways of avoiding legal disputes and conflict resolution in U.S.-Mexico-China business transactions.

A highlight of the program was a day-long field visit to Tijuana, Mexico, where the participants met with representatives of Deloitte, led by Tijuana China Services Group Director Gonzalo Gomez, and the Tijuana Economic Development Council to learn about the business opportunities of operating a maquiladora in the border city.

The delegation also visited Qualcomm Institute on the campus of UCSD, enjoyed wine tasting and dinner sponsored by HSBC at Orfila Winery, and took a ferry across San Diego’s bay for dinner in Coronado.

The second week of the workshop took place in Mexico City, where the participants met with representatives from HSBC Mexico, China Council for the Promotion of International Trade (CCPIT), ProMexico, Huawei, National Exterior Commerce Bank (Bancomext) and Galicia Abogados to further understand business practices and opportunities for Chinese investors.

Salvador Wang, a representative of Huawei’s Public Affairs Department, spoke with the Chinese executives about the giant technology company’s experiences in Mexico. The delegation also heard a presentation by Xiaochu Shi, Assistant Representative in CCPIT’s Mexico office.

At HSBC’s corporate offices in Mexico City, Chief Economist Sergio Martin, spoke about projections for Mexico’s economy. And Raluca Popa, head of HSBC’s China Desk, spoke about the internationalization of the RMB.

At Deloitte’s Learning Center on the city’s elegant Reforma Boulevard, Chinese executives heard detailed information about Mexico’s fiscal reforms and tax laws and met with Xiao Cheng of Deloitte’s China Services Group.

Miguel Siliceo Valdespino, Chief Financial Officer at Bancomext, spoke with Chinese executives about new financing agreements between China and Mexico to promote exports to China. And attorneys at Galacia Abogados, led by Counsel Juan Pablo Cervantes, spoke about a recently approved National Infrastructure Plan, the first such plan in Mexico’s history.

During the week in Mexico City, the Chinese executives made a field visit to a Grupo Bimbo plant, where they toured the plant and learned about Bimbo’s successful strategy to introduce its line of bread products to the Chinese market.

They also toured the majestic pyramids of Teotihuacan to deepen their appreciation of Mexico’s cultural heritage.

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