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Mexico hopes to join the IEA as it continues reforming the oil and gas sector

Mexican Secretary of Energy Pedro Joaquin Coldwell today presented International Energy Agency (IEA) Executive Director Fatih Birol with an official letter declaring Mexico’s interest in becoming an IEA member. The declaration of interest is the latest step in Mexico’s ongoing process of reforming its oil and gas industry.

“I am delighted that Mexico, a G20 member and significant energy producer and consumer, has decided to take this important step,” Dr. Birol said during a press conference with Secretary Joaquín Coldwell at IEA headquarters. “This presents an excellent opportunity for the IEA to strengthen its ties with Mexico, and opens the door to greater engagement across Latin America. It is a key step towards our objective of building a truly global international energy organization.”

Mexico is the second-largest economy in Latin America and, with more than 112 million persons, the third-most-populous member country in the OECD. Mexico is also the third-largest oil producer in the OECD and an importer of refined petroleum products.

Mexico has been trying to reform its traditionally state-run oil and gas industry into a free-market system. On August 11, 2014, Mexico ended Petroleos Mexicanos’ (Pemex) 76 year nationalization reign on the country’s hydrocarbon resources.

Birol commended Mexico’s efforts during the press conference, saying “there is every reason to expect that this successful process will continue and be reinforced and accelerated by closer ties with the IEA.”

Despite a push to a more market-based industry, attracting international oil companies has been a challenge for Mexico. During the country’s first offshore bid process, held in July of this year, 12 of 14 blocks went unsold, with only nine of the 26 companies who signed up for the auction submitting bids. The second round of bidding went better after some changes to the auction terms, with three of five blocks selling the second time around.

IEA membership

The IEA’s members total 29 countries, and include most members of the Organization for Economic Cooperation and Development (OECD). In order to be considered for membership, a country must:

  • Be a member of the OECD
  • As a net oil importer, reserves of crude oil and/or product equivalent to 90 days of the prior year’s average net oil imports to which the government (even if it does not own those stocks directly) has immediate access should the Co-ordinated Emergency Response Measures (CERM) – which provide a rapid and flexible system of response to actual or imminent oil supply disruptions – be activated;
  • A demand restraint program for reducing national oil consumption by up to 10%;
  • Legislation and organization necessary to operate, on a national basis, the CERM; and
  • Legislation and measures in place to ensure that all oil companies operating under its jurisdiction report information as is necessary.

Even though the requirements include membership in the OECD, not all OECD members are included in the IEA’s ranks. As of 2015, Iceland, Israel and Slovenia were members of the OECD but not of the IEA. In order to become a member country of the IEA, countries must meet certain requirements. As of 2015, both Chile and Mexico are now IEA candidates.

IEA background

The IEA describes its mission as follows: “The IEA is an autonomous organisation which works to ensure reliable, affordable and clean energy for its 29 member countries and beyond.” The organization introduces its history section as follows: “The IEA was founded in 1974 to help countries co-ordinate a collective response to major disruptions in the supply of oil. While this remains a key aspect of its work, the IEA has evolved and expanded. It is at the heart of global dialogue on energy, providing authoritative statistics and analysis.”

It is interesting to note that 13 of the 22 speeches given by EIA executive directors and others in the past six months were on the topics of renewable energy, climate change and the emerging energy transition. The IEA’s “Agreement on an Energy Program” (amended 2014) is available here.

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