070813 diagnóstico de sempra energy del sector energético en méxico

Strategic Workshop

-Mexico’s Energy Sector-

Workshop Prepared for Sempra Energy

San Diego, California

August 13, 2007

2

Contents

1. State of Play of Mexico’s Energy Sector• Key energy institutions

• Regulations and legal framework

• Where does Mexico’s energy sector stand and how it got there

• Operational and financial constraints facing the industry

2. Existing Business Lines Controlled by the State and Open to Private Sector

• Who controls of different business lines and makes the decisions

• Barriers to entry

• Government intervention

• List of private sector investments to date

3. Key Stakeholders in Mexico’s Energy Reform and How Reform Could Evolve

• New energy leaders and inter-play

• Possible alliance and conflict maps

• Consensus in defining energy reform

• Legislative voting scenarios

• Profiles

4. Potential Strategies to Pursue

• Opportunities that might emerge from reform

• Future projects and priorities of CFE and PEMEX

• Other investment opportunities and areas to consider

5. Support Slides

3

Stay of Play of Mexico’s Energy Sector

8:30 am – 10:00 am

4

Key Energy Institutions

5

Mexico’s Current Energy Sector - Key Institutions

SENER

- Secretary of Energy -

Energy Regulatory Commission

Energy Savings Commission

CNSNSComision Nacional de Seguridad

Nuclear y Salvaguardias

IMP -Mexican

Petroleum Institute -

IIE -Mexican Electric

Research Institute -

ININ – National

Institute of Nuclear

Research -

State Owned Utilities

6

Mexico’s Current Energy Sector - Key Institutions

Mexico’s 2007 Federal Budget totaled MXP 2,260 billion. This represents a 14.5% increase

over the approved 2006 Federal Budget.

In total, Mexico spends 18% of its federal budget on energy with PEMEX accounting for 8%.

In summary:

Institution2007 Budget

(MXP Million)

As a % of Total

2007 Federal

Budget

Number of

Employees

CFE 191,236.4 8.46% 79,969

PEMEX 182,298.0 8.06% 148,200

LFC 27,972.6 1.24% 40,478

SENER 520.8 0.02% 858

IMP 358.9 0.02% 6,700

ININ 349.0 0.02% 791

CRE 126.2 0.01% 131

IIE 123.3 0.01% 1,090

CNSNS 89.9 0.00% 201

CONAE 57.3 0.00% 95

TOTAL 403,132.3 17.83% 278,513

Source: IPD Latin America, based on 2007 Federal Budget and information from government entities.

7

Regulations and Legal Framework

8

Pertinent Energy Regulations

Articles 25, 27 & 28

of the Mexican Constitution

NOM’s, Directives, Resolutions and Standards

ELECTRIC SECTOR

Regulatory Law of

Constitutional Article 27 in

the Field of Petroleum

(RLCA27-FP)

HYDROCARBONS SECTOR

The Public Service

Electric Energy Law

(PSEEL)

PSEEL Regulation

PSEEL Regulations

with Regard to

Contributions

NOM’s, Guidelines and

Resolutions

The CRE Act

PEMEX

Organic

Law

Natural

Gas

Regulation

RLCA27-

FP

Regulation

Oil

Activities

Regulation

LPG

Regulation

PEMEX

Organic

Law

Regulation

9

Pertinent Energy Regulations - Mexican Constitution

Art. 25

Electricity Hydrocarbons

Art. 27

Art. 28

Mexican energy legal framework starts at the constitutional level from which all other

relevant laws and regulations are derived.

• Grants the State the exclusive ownership and control of all strategic areas defined in

Article 28.

• Defines oil, natural gas, refined products, basic petrochemicals and electricity as

“strategic” areas strictly reserved to the State. The State will control and undertake

these activities through two public utilities (PEMEX, CFE and LFC).

• Grants the State direct ownership of all

hydrocarbon resources located in Mexican

territory.

• Defines ownership as an absolute and

unassailable right.

• Establishes that no concessions or risk-sharing

contracts can be granted.

• Establishes that exploitation will be undertaken

accordingly to secondary regulations.

• Grants the nation the exclusive

responsibility of generating,

transmitting, transforming and

distributing electricity intended for

public service*.

• Establishes that in these areas, no

concessions or risk-sharing

contracts can be granted.

* Article 4 of the Public Service Electric Energy Law defines “public service” as activities related to the operation,

maintenance and planning of the National Electricity System and of the generation, transmission, transformation and

marketing of electricity.

10

Pertinent Electricity Regulations - Electricity

The PSEEL establishes the basic legal framework for the power sector, detailing the implementation of Constitutional Articles 25, 27 and 28.

Grants the State the exclusive responsibility of generating, transmitting, transforming and distributing electricity intended for public service, through CFE (the PSEEL acts as CFE‟s Organic Law).

Defines the modalities under which private participation is allowed (as a result of 1992 reforms).

The Public Service Electric Energy Law (PSEEL)

PSEEL Regulation:

Implements the PSEEL and specifies the regulations that will apply to those activities reserved to CFE (Public Service) and those open to private participation.

Specifies the events and conditions under which state governments, municipalities, etc. have to make economic contributions for the development of work associated with the provision of electric power service.

PSEEL Regulations with Regard to Contributions:

11

Pertinent Electricity Regulations - Electricity

Reserved to State (Public Service)

Open to Private Participation

Generation Transmission Distribution

CFE & LFCNational

Transmission Grid

Third Parties Others

Imports

Private

ParticipationSelf-use

Cogeneration

National

Transmission

Grid

Regulated by the CRE

IPPs

Electricity Legal and Regulatory Framework in Summary:

Self Supply

Imports

Exports

12

Pertinent Energy Regulations - Hydrocarbons

This law details how Constitutional Articles 27 and 28 are applied. Among other things, it:

Regulatory Law of Constitutional Article 27 on Petroleum

• Entrusts PEMEX as the sole entity responsible for the exploration, exploitation, transportation, storage and distribution of petroleum, as well as those “strategic” areas defined in Article 28.

• Clarifies - PEMEX is allowed to sign service contracts in the oil & gas sector for work to be performed by private sector companies as long as:

Remuneration is always in cash and under no circumstances payments are linked to the production and/or results derived from the services rendered.

The regulatory law was amended in 1995 to allow private sector participation in natural gas distribution, storage, transportation, exports and imports.

13

Defines the role of PEMEX and its four subsidiaries.

Entrusts PEMEX with the central planning and direction of all strategic activities related to the hydrocarbons industry.

Allows PEMEX and its subsidiaries to sign contracts with private companies in order to successfully complete their activities.

PEMEX Act


Natural Gas Regulation

Implements the Regulatory Law of Constitutional Article 27 on Petroleum.

Clarifies the specific regulations governing natural gas in the areas of FHS, transportation, distribution and storage activities.

Establishes CRE‟s authority and the essential legal framework that applies to the issuance of natural gas and electricity permits.

14


Hydrocarbons Legal and Regulatory Framework in Summary:

Current legislation allows private participation in the downstream segment of the industry, while the upstream continues to be under exclusive direct control of the State.

UPSTREAM MIDSTREAM DOWNSTREAM

Exploration

Production

Petrochemicals

Natural Gas LDC

Refining

Pipelines

Mexican Constitution reserves all

upstream activities to the State.

State owns the resources - entrusts

PEMEX to undertake all E&P

Payments must be in cash and

under no circumstances can be

linked to production or profit.

Hydrocarbon regulatory laws permit

PEMEX to sign Service Contracts with

private sector.

Refining

100% controlled by PEMEX,

through its Pemex Refining

(PR) subsidiary.

Pipelines

PGPB maintains monopoly

over Nat‟l Pipeline System

1995 legal reforms allowed

private sector to construct,

own and operate pipelines.

Petrochemical industry

(artificially divided)

Basic Petrochemicals 100%

controlled by PEMEX.

Secondary Petrochemicals

open to private participation.

Natural Gas LDC

Transport, storage, distribution,

imports and exports open to

private participation.

Note: Storage includes LNG

Reserved to State Open to Private Participation

15

Pertinent Regulations – The CRE Act

The CRE Act:

In 1995 the CRE Act transformed the regulatory commission from a power advisory entity (based on a 1993 decree) in to a decentralized administrative agency in charge of regulating the natural gas and electricity industries (oil does not have a regulator in Mexico):

Electricity Natural Gas

• Issue private sector generation permits for the

activities allowed under PSEEL.

• Review and approve the criteria for setting

fees related to public electricity service.

• Participate in setting tariffs for wholesale and

final sale of electricity.

• Verify that CFE and LFC purchase electricity

at the lowest cost and also offer optimum

stability, quality, and safety of electric service.

• Approve the methodologies for:

• Calculating payments for the purchase

of electricity used in public service.

• Calculating payments for electricity

transmission, transformation and

delivery services.

• Establishes First Hands Sales (FHS) –

Although the intention was to govern the

sale of all natural gas, the regulation only

pertains to the sale of gas from PGPB to

third-parties within Mexico.

• Evaluation and award of transportation,

storage and distribution permits.

• Non-discriminatory open access.

• Unbundling of services.

• Establishes natural gas and LPG prices

and rates (electricity rates are set by

Ministry of Finance (Hacienda)).

16

State of Mexico’s energy sector?

17

Snapshot of Mexico’s Energy Sector

Source: SENER, PEMEX and IPD Latin America

* Based on Pemex Outlook, July 2007

The Energy Sector in the Mexican Economy

• 17% of GDP

• 30% of total exports*

• 37% of Federal Revenues

MEXICO

PEMEX

Long Term Foreign Currency

Long Term Foreign Currency

Moody’s S&P Fitch

Baa1*

Baa1

BBB*

BBB*

BBB**

BBB-

RATINGS

CFE Long Term Foreign Currency N/A BBB* N/A

* Upgraded January 2005, ** Upgraded December 7, 2005

Source: IPD Latin America, based on SENER, PEMEX and INEGI

In 2006, the energy sector accounted for:

18

ENERGY BALANCE: S12.67 Billion

Average Mexican Oil Export Basket Price:

1998: 10.18 dollars per barrel

2006: 53.04 dollars per barrel

Fuente: IPD Latin America

Energy Trade Balance 2006

- Imports vs. Exports -

Snapshot of Mexico’s Energy Sector

Oil Exports

$34.71

Petrochemicals

-$14.40

Natural Gas

-$2.08

Fuel Oil

-$0.23

Gasoline

-$11.01

LPG and Diesel

-$1.19

-$30

-$20

-$10

$-

$10

$20

$30

$40

US

D B

illio

n .

Total Exports:

USD$ 41.59 Billion

Total Imports:

USD$ 28.92 Billion

Petrochemical

Exports

$6.88

-$40

19

Snapshot of Mexico’s Hydrocarbons Sector

PEMEX

Financial

Statistics

Total Revenue (Billion)

Total CAPEX (Billion)

Oil Basket Price

Total Debt (Billion)

Labor Liabilities (Billion)

2005

US$ 86.1

US$ 10.8

US$ 42.7

US$ 49.9

US$ 33.2

US$ 97.6

US$ 13.8

US$ 53.0

2006 2007**

US$ 52.3

US$ 47.1

US$ 15.4

* Based on PEMEX 20-F

**Unaudited results as of June 30, 2007

US$ 52.3 US$ 50.8

US$ 41.8 US$ 44.8

Natural Gas

Production

(BDFD)

Crude Oil

Production

(MMBD)3.0

3.13.2

3.4 3.43.3

3.3

3.2

2000 2001 2002 2003 2004 2005 2006 2007*

4.7 4.5 4.4 4.5 4.6 4.85.4

5.9

2000 2001 2002 2003 2004 2005 2006 2007(*)

Crude Oil Reserves (MMB)

- As of Jan 1, 2007 -

Proven

Probable

Possible

11,047.6

11,033.9

9,827.3

Source: IPD Latin America, based on PEMEX data

2000*

US$ 48.9

US$ 7.5

US$24.8

US$14.9

US$11.2

* Results as of June 30, 2007

20

Snapshot of Mexico’s Electricity Sector

CFE

Operating

Statistics

Capacity (MW)

Generation (TWh)

Transmission Lines (Km)

Substations Capacity (MVA)

2000 2005

35,385 45,576

190.00 215.63

2007

35,271 45,767

Transmission

Distribution

107.8 134.7

31.7 39.7

Distribution Lines (Km) 579,300 642,700

49,834*

111.777*

47,884**

655,700**

137.5**

41.7**

2006

47,857

221.90

47,485

137.0

41.0

653,200

* Information as of July 2007; ** Information as of March, 2007

Source: IPD Latin America, based on CFE

77%

23%

2007 Capacity: 49,834 MW

CFE: 38,377 MW

2007 Generation: 111.777 TWh

IPPs: 11,457 MW CFE: 78.847 TWh IPPs: 32.929 TWh

71%

29%

21

Impetus to the Energy Sector’s Current

State of Affairs

22

Hydrocarbons Sector

23Source: IPD Latin America, based on PEMEX and SENER

Hydrocarbons – All Trends Moving in the Wrong Direction

PEMEX has faced years of under-investment:

CAPEX

US$ Billion

6.4 5.8

8.3

3.1

2.01.6

1.0 1.1

1.8 1.61.9

2.52.8 3.0

2.0

3.1

4.2

5.15.5

6.8 6.9

7.8

10.1 10.1

10.8

13.8

15.4

0

2

4

6

8

10

12

14

16

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Oil Production

MMBD1980’s 1990’s 2000- 2007*Average

CAPEX

(US$ Billion)

Oil Production

(MMBD)

3.27 3.22 10.21

2.49 2.77 3.22

*Note: 2007 values are estimates.

2.1

24

Total Hydrocarbon Reserves

- At the Beginning of the Year-

(MMBECO)

45,000

50,000

55,000

60,000

65,000

70,000

19

81

19

83

19

85

19

87

19

89

19

91

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

*

72,500

66,450

58,204

45,376.4

Total Crude Oil & Gas Proven Reserves

- At the Beginning of the Year-

Hydrocarbons – All Trends Moving in the Wrong Direction

Source: IPD Latin America, based on PEMEX

*Note: 2007 estimated data

24,70023,660

15,123

12,88211,047

0

5,000

10,000

15,000

20,000

1999 2000 2001 2002 2003 2004 2005 2006 2007*

Crude Oil (MMB)

45,06341,383

21,62620,433 18,957

0

10,000

20,000

30,000

40,000

50,000

1999 2000 2001 2002 2003 2004 2005 2006 2007*

Natural Gas (BCF)

25

PEMEX – Trends All Moving in the Wrong Direction

3P Reserves Discovered (MMBECO)

313 216612 709

916 950 966

2000 2001 2002 2003 2004 2005 2006

Source: IPD Latin America, based on PEMEX data

1P and 3P Replacement Ratio

3P

1P

2000 2001 2002 2003 2004 2005 2006

21% 14% 41% 45% 57% 59% 60%

-1% -19% -614% 26% 23% 26% 41%

Thousand B/D Mexico’s Projected Crude Production

Without Major New Discoveries

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Cantarell Other Fields

3,383

2,445

Threat of significant crude production

declines without major E&P efforts

Note: The majority of the 2006 1P and 3P increases come from

reserves reclassification and not because of new discoveries

26

Operational Constraints

Cantarell has started to decline (in 2006 it declined 12%, and in 2007 it is expected to decline around 12% - 14%)*

Lifting costs continuing to rise (@ $4.2/b at year end 2006 vs. $3.8/b in 2004. Chicontepec extraction cost is believed to be in the range of $14/b).

Continued decline in hydrocarbon reserves

Principal production focus: “low-hanging fruit” & enhanced recovery

Major infrastructure investment needed for enhanced recovery efforts

PEMEX lacks technology, know-how and financial resources to pursue riskier/ complicated projects on its own (deepwater, marginal fields, Chicontepec)

Deepwater efforts only starting (Lakash: 935 meters, Q4 – 2006 -- Noxal: 951 meters, Q4 - 2005 -- Nab-1: 681 meters, discovered Nov. „04); besides technology, lack risk capital

Natural gas demand continues to outstrip supply

PRODUCTION CONSTRAINTS:

* According to Morales Gil comments, when presenting the Development Plan

27

POWERFUL AND COSTLY UNIONIZED WORKFORCE:


Over 148,000 employees and growing; approximately 80% are unionized.

Collective bargaining agreement contains provisions that shares increased windfall with union when oil prices increase.

5 of 11 PEMEX Board members are union representatives.

PEMEX‟s retired employees or their survivors receive same benefits as existing union workers under all ongoing labor negotiations.

Historically limited flexibility to move unionized workers to other regions/projects, e.g. Poza Rica; Only local field experience is created.

Total pension liabilities as of June 30, 2007 have quadrupled when compared to the level registered in 2000.

28

ABSENCE OF CUTTING EDGE RESEARCH & DEVELOPMENT:

www.imp.mx


Attractive retirement and post-retirement benefits have created a brain drain of senior technical PEMEX staff; coupled with massive workforce leads to delayed and pyramid decision making.

IMP not known as a world-class lead technology developer.

Functions more as a workforce contracting agency for PEMEX than anything

else.

IMP not allowed to initiate new initiatives on its own (only permitted upon PEMEX

request/ agreement).

IMP lacks sufficient funds to carry out long-term R&D efforts.

Mexico‟s hydrocarbons R&D department (IMP – Instituto Mexicano del Petróleo) is quasi-independent of PEMEX but receives no direct funding from it; has functioned more as an academic and privileged early retirement destination for senior technical PEMEX staff.

http://www.imp.mx/

29

Financial Constraints

PEMEX’s Punitive Tax Burden:

PEMEX remains largest single tax contributor – more than 1/3 of government revenues

Budgetary constraints have limited investment in new technologies and exploration

Budgetary constraints have dictated focus on crude oil projects

over non-associated natural gas projects

CAPEX investment increasingly dependent on use of debt

Severe under-investment across all PEMEX business lines

Increased Unfunded Labor Obligations

30


Taxes and Duties paid by PEMEX (1998 – 2007*)

7.129.24 7.27

10.41 11.108.37

4.861.88

9.31

12.60

23.42 17.3725.66

37.25

51.81

$10

$20

$30

$40

$50

$60

US

D B

illi

on

s

$16.43

$21.84

$30.69 $29.11 $28.47

$34.04

$42.11

$53.69 $53.55

25.28

1998 1999 2000 2001 2002 2003 2004 2005 2006

IEPS Hydrocarbon Duties and others

2007

18.70


*Note: 2007 figures are estimates as of June 30, 2007

31




$-

$10

$20

$30

$40

$50

$60

1999 2000 2001 2002 2003 2004 2005 2006 2007*

Peso-denominated debt Debt in other currencies

$12.46 $14.91

$18.61

$24.33

$32.87

$40.16

$49.80 $52.32 $50.83

PEMEX Consolidated Debt

(US$ Billion)

PEMEX Labor Liabilities

(US$ Billion)

$11.2$14.5

$25.7$25.4 $27.1

$34.9

$41.8

$44.8

$8.7

$-

$10

$20

$30

$40

$50

1999 2000 2001 2002 2003 2004 2005 2006 2007*

32


PEMEX 2007 data (As of June 30):

Total Sales: US$ 47.4 billion

Equity: US$ 6.7 billion

PEMEX Equity vs. Total Sales

(US$ Billion)

36.3

50.0 50.0 52.558.8

69.7

86.2

97.6

17.0 15.7 13.4 9.84.3 3.0

-2.5

3.7

-20

0

20

40

60

80

100

120

1999 2000 2001 2002 2003 2004 2005 2006

Total

Sales

Equity

2000 2001 2002 2003 2004 2005 2006

24.79 18.61 21.52 24.78 31.05 42.71 53.04

1999

15.57

2007*

52.32

Mexican Oil Price Average Price (US$/barrel)



33

Electricity Sector

34


PRODUCTION ISSUES:

A sizeable portion of CFE‟s generating capacity is quite old and inefficient (around 15% of CFE capacity is more than 30 years old).

Reserve margin currently exceeds 42% as a result of lower economic growth and high rainfall that has increased the amount of hydro power required. The Calderon Administration is exercising increasing pressure to lower reserve margin capacity through shutting down obsolete power plants.

Lack of fuel supply alternatives.

The real issue, natural gas supply.

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

1995

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Minimum

Reserve Margin: 27%

Minimum Operating Reserve Margin : 6%

35


CFE latest planning scenarios (2007-2016) call for the construction of 66 new power plants that amount to 27,037 MW.

12,184 MW of natural gas-fired combined cycle power plants.

CFE has now recognized that most of the “undesignated” power plants will have to be fueled by natural gas, adding an additional 6,021 MW of natural gas. Thus, total natural gas dependency will be 67%.

CFE’s Future Installations

Source: IPD Latin America, based on CFE

Gas Turbine, 379 MW

Others, 519 MW

Wind and Geothermal, 747 MW

Coal, 3,478 MW

Hydro, 3,709 MW

Undesignated, 6,021 MW

Combined Cycle, 12,184 MW

36


GROWING DEPENDENCE ON NATURAL GAS (NG):

Mexico‟s power sector has become increasingly dependent on NG. CFE‟s projections indicate that by 2012 around 65.5% of power generation will come from NG. Mexico has been unable to increase its own NG production. As a consequence, NG supply will not be met by domestic production for the foreseeable future.

2006 2007 2008 2009 2010 2011 2012

867 399 246 488 441 628 1,020

2005

844

2013

1,511

2014

1,814

2015

2023

Natural Gas Deficit (MMCFD)

1.68 1.99 1.91 2.04 2.37 2.44 2.66 2.98 3.22 3.44 3.50

5.055.68

6.27 6.48 6.746.99 7.05 7.01

6.87 6.82 6.64

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Electric Sector

OthersNational ProductionDemand

Total National

Demand: 5.896.55 6.67 6.73 7.22 7.43 7.68 8.03

8.38 8.63 8.66

Total National

Production

Natural

Gas

Balance

2005 - 2015

(BCFD)

Source: CFE, March 2007.

NOTE: The graph does not include natural gas imports.

37


High subsidies in electricity tariffs

Average Price

of Electricity

(MXP/KWh)

Price/Cost

Ratio

Subsidies

(MXP Million)

Average Price

of Electricity

(MXP/KWh)

Price/Cost

Ratio

Subsidies

(MXP Million)

CFE TOTAL

Residential

Commercial

Services

Agriculture

Industrial

LFC TOTAL

Residential

Commercial

Services

Agriculture

Industrial

1.00

2005 2006

0.70 63,660 1.08 0.69 77,068

1.17 0.53 31,111 1.16 0.54 33,064

0.91 0.42 45,117 0.95 0.40 53,399

0.99 0.28 16,033 1.07 0.32 15,148

2.09 1.11 0 2.28 1.09 0

1.97 0.59 5,284 1.92 0.60 5,163

1.45 0.82 1,481 1.54 0.79 2,011

1.55 0.69 1,305 1.64 0.81 794

TARIFF

0.44 0.28 8,740 0.42 0.25 10,171

0.94 0.92 8,321 1.04 0.92 11,487

0.50 0.20 148 0.42 0.14 159

1.20 0.68 8,341 0.96 0.66 8,800

Source: IPD Latin America, based on CFE and LFC data

38


2006

CFE LFC

CFE and LFC Results

- Thousands of MXP -

Source: CFE and LFC

Revenue (loss) before government transfers

2005

CFE LFC

Government transfers

Net Revenue (loss)

1,953,094(11,894,447)

51,910,25069,879,995

2,080,3815,030,548

(28,294,486)

25,207,263

(3,087,223)

(32,074,561)

33,530,681

1,456,120

Residential

24%

Commercial

8%

Services

4%

Industrial59%

Agricultural

5%

Distribution of Electricity Sales

by Sector 1995 – 2005

Distribution of Electricity Sales

by Sector 2005 (GWh)

Residential

Commercial

Services

Industrial

Agriculture

42,531

12,989

6,450

99,720

8,067

Total 169,757

3939

Existing Business Lines Controlled by the

State and Open to Private Sector

(10:15 am – 12:15 pm)

4040

Mexico’s Energy Sector

Oil, Gas & Power Industries – Existing Business Lines

4141

Mexican Energy Sector – Public Sector Players

The Mexican Constitution states that the production, distribution,

and marketing of energy supplies are (with a few exceptions) under

the control of the State, which undertakes operation of these

activities through two* state-owned utilities:

In order to attract investment and free up public

resources in the 1990‟s, the government started a

process of “liberalization” in the energy sector, opening

up certain areas for private participation.

PEMEX: this state monopoly is responsible for all the

exploration, exploitation, production and commercialization of

Mexican hydrocarbons, and most of its derivatives.

CFE: this state monopoly is responsible for all generation,

transmission and distribution of electrical power in the country.

* Although LFC is also an electricity state owned utility , it is basically in charge of distributing electricity in Mexico City

and the surrounding Estado de Mexico, Hidalgo, Morelos and Puebla.

4242

Who controls which business lines

In 1992 PEMEX was divided into four decentralized subsidiaries that are

coordinated by PEMEX Corporate

PEP (Pemex

Exploration and

Production)

PGPB (Pemex

Gas and Basic

Petrochemicals)

PR (Pemex

Refining)

PPQ (Pemex

Petrochemicals)

Exclusively responsible

for all exploration and

production of Mexico‟s

crude oil and natural

gas

1) Exclusively responsible

for processing all domestic

natural gas and liquids;

2) Transports, distributes

and markets basic

petrochemicals*

1) Exclusively

responsible for converting

oil into gasoline, jet fuel,

diesel fuel, fuel oil and

LPG;

2) Distributes and

markets these products

1) Manufactures

and markets

secondary

petrochemicals

along with the

private sector

* Methane and natural gas liquids: ethane, propane, butane and condensates

4343

Who controls which business lines – Crude Oil

All hydrocarbons are the exclusive property of the nation

• PEMEX is responsible for the exploration, exploitation and commercialization of

Mexican hydrocarbons. However, there are options for private companies to work

along with PEMEX:

Ownership of Resources: Mexico

Responsible Entity : PEP

Private sector participation:

• Service Contracts: Drilling, Seismic,

Infrastructure supply, future Alliance Contract

• Technical Exchange agreements

Ownership of Resources: Mexico

Revenues from Production: PEMEX

Responsible Entity : PMI (PEMEX

International Trading)

Reserved to the STATE

44

Who controls which business lines – Oil & Gas

PEP uses a significant number of service companies as subcontractors.

Hydrocarbons produced by subcontractors are not differentiated from

production from PEMEX.

Given that PEMEX does not function as a corporation but rather a state-

owned entity, PEMEX does not have full control of all of its activities.

What PEP controls? What PEP does not control?

Exclusive right to explore

(determine location, timing, etc.)

Once financing has been obtained,

PEP has a large amount of

flexibility in how it allocates those

resources

Perform all FHS of domestically

produced products

Once a project is implemented,

PEP leads all planning efforts

Pricing of its products is set by the

Ministry of Finance

Debt issuance is made in

coordination and with approval of

the Ministry of Finance

Marketing of its products is done

by other PEMEX subsidiaries

Cannot negotiate directly with its

union

4545

Reserved to the STATE Open to PRIVATE PARTICIPATION

Responsible Entity:

• E&P: PEP

• Processing and First Hand

Sales: PGPB

Private sector participation:

• Service Contracts: Drilling,

Seismic, Infrastructure supply

• Multiple Service Contracts

(MSC)

• Technology transfer

agreements

Activities Regulated by the CRE

Reforms to the Regulatory Law of Article 27 on

Petroleum (1995) allowed private sector

participation

Who controls which business lines – Natural Gas

• 21 LDCs

• 17 major private sector open access

pipelines

• 3 LNG projects under way

• 350+ LPG Disco’s (controlled by 5 families)

Private Participation in Natural Gas and LPG

4646

Electricity Industry Structure

Reserved to State

Open to Private Participation

Generation Transmission Distribution

CFE & LFCNational

Transmission Grid

Third Parties Others

Imports

Private

ParticipationSelf-use

Cogeneration

National

Transmission

Grid

CRE Regulated

Independent Prod (IPPs)

Self Supply

Imp / Exp

In 1992, the Electricity Public Sector Law (LSPEE) was amended to allow

private participation in generation under the following schemes:

47

Who controls which business lines – Power

As a result of the 1992 amendments to the Constitution and the LSPEE, over

336 generation permits have been authorized by the CRE.

IPP‟s: 21 projects accounting for 11,457 MW (equivalent to 23% of

CFE‟s total generation capacity)

Cogeneration: 35 projects accounting for 1,685 MW

Self-supply: 246 projects accounting for 4,685 MW

Import and Export: there are 35 projects combined, accounting for 1,830

MW

IPP58%

Cogeneration9%

Self-supply24%

Import -Export

9%

Private Projects – Installed Capacity

4848


Who really makes the decisions in Mexico?

49

Key Players in the Mexican Energy Sector

SENER, SEMARNAT, Hacienda and the Presidency Office

SENER is in charge of planning. State-owned utilities provide opinions

only.

Hacienda is responsible for approving the financing scheme to be

undertaken for every government-sponsored energy project.

Hacienda is also responsible for establishing transfer prices among

PEMEX subsidiaries.

SEMARNAT is in charge of enacting the environmental regulations and

establishing the mitigation measures to be followed by each project.

The Presidency Office, defines the priority of each of the projects to be

undertaken, based on suggestions made by the President‟s Cabinet.

50

Other Key Players in the Mexican Energy Sector

State

Municipal

Federal

Each of the Mexican

states issues a state

development plan,

which is

renewed/updated

every time a new

administration takes

office.

State authorities and

governors oversee

land use, i.e.

industrial, farming, etc.

Municipal authorities issue the construction permits, as

well as manage the public recording of land use in the

area.

SHCP: funding,

transfer prices among

PEMEX subsidiaries

SENER: planning &

energy policy

SEMARNAT:

environmental

regulations

CNA : water use and

discharges

5151


Barriers to Entry

5252

Legal barriers in the oil sector include:

Ownership of all hydrocarbons extracted and produced in Mexico isrestricted to the State, to be exclusively developed by PEMEX.

Mexican Constitution does not allow any form of PSAs, or anycontract that ties performance or production with final payment.

Consequently, PEMEX is only able to enter service agreementsand not JV’s, within Mexican territory.

After the catastrophe seen in the reconfiguration and upgrade of theCadereyta and Madero refineries, the Mexican government startedrestricting participation in certain projects to companies based incountries with signed FTAs with Mexico.

Barriers to Entry – Crude oil

5353

Legal barriers in the oil sector include:

Special drilling projects require that the potential investor hasprevious work experience with PEMEX.

Minimum local content requirements (10%- 50%).

Rigidity in submitting bid proposals

PEP‟s restricted bids and direct assignments (FSO, FPSO, seismic,nitrogen injection, etc.)

Barriers to Entry – Crude oil

5454

Pipelines:

The permanent FHS regime has not been implemented, allowing the following dynamics:

No real open access to the National Pipeline System (NPS);

PGPB controls all cross-border interconnection points;

No real Chinese Walls between PGPB‟s marketing and transportation companies.

As a result, PGPB‟s has a de-facto monopoly over the natural gas industry as it can offer bundled-service packages including supply and transportation.*

Other barriers to entry related to development, include a poor, deficient, public land record, which creates further uncertainty when negotiating ROW‟s with local landowners.

Barriers to Entry – Natural Gas

* Plus an “administrative charge” in addition to the established tariffs.

5555

Pipelines:

If a FHS regime were fully-implemented, the following activities would follow:


An open season on the NPS would take place

PGPB would have to offer unbundled natural gas services

Any private company in Mexico could purchase natural gas at the border or at PGPB‟s processing centers (Reynosa or Cd. PEMEX) and have it delivered to a location of its convenience

A natural gas user (industrial, LDCs, IPPs) would still have the ability to purchase natural gas from PGPB and have it delivered at location of its choice (as currently takes place)

Purchase of domestically produced gas would still only be made through PGPB

56

Local Distribution Companies (LDC’s):

Regulation based on maximum-income tariffs.

Disloyal competition with LPG.

LPG has enjoyed substantial subsidies

Local distribution companies are “enforcers” of their market share.

Given subsidies and familiarity, natural gas has not fully accepted as thefuel of choice by households and industry.


33,388

852,348

1,945,382

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Us

ers

Source: CRE

14.3% average

growth since

2001

5757

Natural gas storage:

Under the existing regulation, LNG is considered a storage activity.

LNG projects, to date, are dependent on anchor clients, which due to thecredit ratings and volume required can only be offered by state-ownedutilities.

Similar to what the pipeline business has experienced, the lack of areliable public land record creates uncertainty and excessive costs toobtain site Injunctions

Limited ability to sell excess capacity to third parties.

Complex process to undertake open-season procedures to seek additionalcustomers/capacity.

Who should pay? And can the cost be passed through?


5858

IPPs:

No ability to sell to third-parties (all capacity is committed to CFE)

Obscure dispatch rules

Self-Supply & Cogeneration:

Limited ability to sell excess capacity to third-parties; Max: 20% of the installed capacity

No true access to the electricity grid

Wheeling Charges - A Black Box

Unattractive back-up supply contracts have to be signed with CFE; can make a project uneconomic

Barriers to Entry – Power

5959


Government Intervention in the Sector

6060

Government Intervention in E&P activities

PEP does not function as a company but rather as a state-owned entity. As such, many different government agencies are involved in PEP operations.

Given its lower profitability, natural gas E&P activities play second fiddle to crude oil projects.

All marketing, planning activities are controlled 100% by the state.

SENER, in conjunction with PEMEX (and Congress) determines the production

and export platform.

The Ministry of Finance (Hacienda) dictates the level of debt to be raised in

capital markets.

Hacienda requires PEMEX to pay guaranteed taxes on a monthly basis.

State and local government influence and intervention often results in political

vs. economic decision making.

All these perverse dynamics have forced PEMEX to focus almost singularly on

exploitation efforts to the detriment of exploration and other business activities.

61

Government Intervention in the Natural Gas Sector

1997 2000

Relatively low natural gas prices.

No use of risk management

techniques by majority of large

consumers.

Natural gas prices escalated, and

consumers looked for government

relief.

2003

In November 2003 PGPB

offered three “real” hedging

options depending on a

customer's view of prices and

appetite for risk.

January 2001, the

“4 X 3 scheme”

starts

2001

Residential subsidy: In

April 2005, the

government offered a

sliding scale subsidy

based on

consumption.

2005

6262

Government Intervention in the Natural Gas Sector

Gas Price (HH) vs. 4x3 Scheme

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

Ja

n-0

0

Ap

r-0

0

Ju

l-0

0

Oc

t-0

0

Ja

n-0

1

Ap

r-0

1

Ju

l-0

1

Oc

t-0

1

Ja

n-0

2

Ap

r-0

2

Ju

l-0

2

Oc

t-0

2

Ja

n-0

3

Ap

r-0

3

Ju

l-0

3

Oc

t-0

3

Ja

n-0

4

US/M

MBTU

• Natural gas prices reached US$ 9.57/ MMBTU in January 2001. Price escalation resulted

in massive outcry by industrialists and large consumers.

• Artificial price of US$ 4/MMBTU for a 3 year term established by the CRE in February

2001, retroactively enacted from Jan. 1, 2001 until Dec. 31, 2003.

6363

Government Intervention in Electricity and LPG

The government also provides significant subsidies to CFE's customers aswe have discussed:

Tariff Subsidies 2001 2002 2003

Industrial 14% 11% 12%

Residential 59% 51% 58%

Agriculture 71% 70% 73%

Services 11% 2% 7%

Another example of government intervention can be found in LPG prices.

Subsidies to CFE’s Electricity Tariffs

• Since March 2001, LPG prices paid by final consumers have been subject to a

price cap mechanism set by the Economy Ministry. (LPG FHS are set by the

CRE and based off of Mont Belvieu).

• The argument used for justifying this intervention was that LPG is consumed

by 70% of Mexican homes, and as such, its price affects the national economy.

6464

As can be concluded from the previous examples provided, governmentintervention is common practice in Mexico‟s energy sector.

Government intervention is always focused on the end consumer.

Political objectives maintain a government focus on short term relief overlong term viable solutions.

The one interesting exception is gasoline. However, this results from thedirect impact it has on PEMEX budget and SHCP tax take.

Mexico has had the luxury to subsidize its energy sector to date but thismay not be the case on a go-forward basis given social demands.

As long as CFE and PEMEX continue as monopolies, we do

not foresee a change in the government’s use of this strategy

Government Intervention – In Sum

6565

List of Private Sector Investment to Date

66

1,680 1,991 1,913 2,036

2,371 2,435 2,664

2,975 3,215

3,439 3,496

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

MM

CF

D

66

CFE – Increasingly Important Player in Natural Gas

8.4% demand

growth per year

Source: Eugenio Laris presentation in La Jolla, May 2007

CFE is the main driver behind LNG projects

6767

Natural Gas – Natural Gas Infrastructure

ARTEAGA

TAMPICO

MONTERREY

SALTILLO

ARIZPE

TorreónCd . Lerdo

LAREDO

MATAMOROS

IMPORTS

Sn.

CadereytaParras

Sn.

C.F.E. Colinas

Topolobampo

TOLUCA

MEXICALI

GUAYMAS

CELAYA

LEON

IRAPUATO

SALAMANCA

RAMOS

PIEDRAS

NEGRAS

SILAO

AGUASCALIENTES

EMPALME

CUAUHTEMOC

ANAHUAC

Gómez P.

CD. JUAREZ

ALTAMIRA

CD. MADERO

TLAX.

NUEVO

RIO

BRAVO

PACHUCA

REYNOSA

PUEBLA

DF

MERIDA

IMPORTS

IMPORTS

CananeaSanta

Ana

HERMOSILLOCHIHUAHUA

Delicias

Cd.

Camargo

JiménezQuímica

del Rey

Luis Potosí

Guadalajara

Tula

Poza

Rica

Nvo. Teapa

Atasta

Sta.

Ana

Tlalchinol

Cactus y

Nuevo Pemex

Escalón

Castaños

Pandura

Miguel

Alemán

Fernando

Campo Tam .

C.F.E. El Verde

Nogales

ValladolidCAN CUN

IMPORTS

Naco

Altamira

Energia

Costa

Azul

Pto. Libertad

Manzanillo

Geographic Zones

PEMEX National Pipeline System

Open Access Private Pipelines

Injection Points

Potential LDCs

LNG Under Construction

LNG Proposed Site

Kinder Morgan

Gasoductos de Chihuahua

Igasamex Bajío

Energía Mayakán

Tejas Gas de Toluca

FINSA Energéticos

Transportadora de Gas Zapata

Gasodutos del Bajío

TGN

1

2

3

4

5

6

7

8

9

El Paso Gas Transmission de México

Constructed Open Access Pipelines9

1110 12 2

1 14 6

13

8

3

5

7

4

15

Ductos de Nogales

Gas. de Tamaulipas (San Fernando)

10

11

12

13

14

Pemex Gas y Petroquímica Básica

Gasoductos Baja Norte

PGPB (National Pipeline System)15

16 Gasoducto del Rio

Gas Natural de la Huasteca

16

LNG In Operation

17

17

6868

Open Access Transportation Permits Granted by the CRE

COMPANY LENGTH

(km)

CAPACITY

(MMCFD)

INVESTMENT

(US$ Million)

1. Kinder Morgan Gas Natural 137.2 374 82.0

2. Gasoductos de Chihuahua (El Paso (50%) – PGPB

(50%))38.0 328 18.2

3. Igasamex Bajío 2.5 13 0.3

4. Energía Mayakan Pipeline

(Gaz de France (67.5%) GE (22.5%))710.0 285 276.9

5. Tejas Gas de Toluca (Alliance between Westpark

Resources and Grupo Fermaca)123.2 96 31.0

6. Finsa Energéticos 8.0 8 0.2

7. Transportadora de Gas Zapata (OneOk

International (38%), Williams International Ventures

(37%) Compañía Mexicana de Gas Natural (25%)

164.2 166 75.9

8. Gasoductos del Bajío (TCPL (95%), GUTSA (5%)) 203.0 90 56.5

9. Transportadora de Gas Natural de Baja

California (Gasoducto Rosarito (99%) and Sempra

(1%))

36.0 300 28.2

10. Pemex-Gas y Petroquímica Básica (Naco-

Nogales)339.0 110 22.1

Natural Gas - Transport

6969

COMPANY LENGTH

(km)

CAPACITY

(MMCFD)

INVESTMENT

(US$ Million)

11. Gasoducto Bajanorte (Sempra) 217 400 124.6

12. Ductos de Nogales (Compañía Energética de México

(48.57%), Operadora de Empresas y Servicios (50%))

14.9 15 4.1

13. Gasoductos de Tamaulipas (Gasoductos de Chihuahua

100%)

114.2 2,460 238.7

14. El Paso Gas Transmission de México (El Paso, 100%) 12.5 215 6.6

15. Pemex-Gas y Petroquímica Básica 8,704.0 5,107 436.5

16. Gasoductos del Río (EDF International 99%) 57.9 410 39.3

17. Conceptos Energéticos Mexicanos (Integrated Gas

Services de Mexico (60%), International Project Opportunities

Group (40%))*

1.6 9 0.8

18.Transportadora de Gas Natural de la Huasteca (TCPL

100%)*

198.0 339 225.7

19. Tejas Gas de la Península* 234.5 300 139.5

20. Terranova Energia (Tidelands)* 256.9 1,200 N.A.

TOTAL 11,573.9 12,437.8 1,807.1

Natural Gas - Transport

Open Access Transportation Permits Granted by the CRE

*Permits have been awarded but construction has not started yet

7070

Natural Gas – Distribution – 21 Concessions Awarded

MORELIA

CUERNAVACA PUEBLA

TOLUCA

DF

TIJUANA, TECATE

ENSENADA

MEXICALI

TORREON

LERDO

HERMOSILLO

EMPALMEGUAYMAS

GOMEZ PALACIO

ALTAMIRA

TAMPICO

CD. MADERO

QUERETARO

SN. JUANDEL RIO

CELAYA

TOLUCADF

LEON

IRAPUATOSALAMANCA

CHIHUAHUA

CUAUHTEMOCDELICIAS

TLAXCALA

PUEBLA

MONTERREY

NUEVOLAREDO

SALTILLO

RAMOSARIZPE

ARTEAGA

PIEDRAS

NEGRAS

TLAXCALA

JUAREZ

MATAMOROSREYNOSA

RIOBRAVO

VALLE

CUAUTITLAN -

TEXCOCO

PACHUCA

CUERNAVACA

PACHUCA

SN. LUISPOTOSI

SILAO

AGUASCALIENTES

DURANGO

ZACATECAS

GUADALAJARA

PUEBLA

TOLUCA

DF

TIJUANA, TECATE

ENSENADA

MEXICALI

TORREON

LERDO

HERMOSILLO

EMPALMEGUAYMAS

GOMEZ PALACIO

ALTAMIRA

TAMPICO

CD. MADERO

QUERETARO

CELAYA

DF

LEON

IRAPUATOSALAMANCA

CHIHUAHUA

CUAUHTEMOCDELICIAS

TLAXCALA

PUEBLA

MONTERREY (2)

NUEVOLAREDO

SALTILLO

RAMOSARIZPE

ARTEAGA

PIEDRAS

NEGRAS

TLAXCALA

JUAREZ

MATAMOROSREYNOSA

RIOBRAVO

VALLE

CUAUTITLAN -

TEXCOCO

CUERNAVACA

PACHUCA

SN. LUIS

POTOSI

SILAO

AGUASCALIENTES

LA LAGUNA

DURANGO

ZACATECAS

GUADALAJARA VERACRUZ

Distribution Zones

Distribution Zones not awarded

Source: CRE

CANANEA

SONORA

SN JUAN DEL RIO

RÍO PÁNUCO

1

23

4

5

6

6TOLUCA

7-8

9

10

11

NORTE DE

TAMAULIPAS

12

13

13

14

1516

17

18

19

20

20

21

7171

Natural Gas - Distribution

LDC OwnerLength

(km)

Average

Volume

(m3/ d)

Expected Users

after Yr. 5

Investment

(US$

millions)*

1. MexicaliDGN de Mexicali, S. de R.L. de C.V.

(Sempra)465 25,003 25,346 18.14

2. Piedras Negras Cía. Nacional de Gas, S.A. de C.V. 336 6,992 25,608 0.7

3. ChihuahuaDGN de Chihuahua, S. de R.L. de

C.V. (Sempra)1168 51,242 51,453 46.42

4. Saltillo-Ramos Arizpe-

Arteaga

Gas Natural México, S.A. de C.V.

(Saltillo)656 26,309 40,027 39.03

5. HermosilloGas Natural del Noroeste, S.A. de

C.V. (SourceGas)505 15,185 26,250 21.4

6. TolucaGas Natural México, S.A. de C.V.

(Toluca)595 68,263 47,279 31.6

7. Monterrey Cía. Mexicana de Gas, S.A. de C.V. 921 115,020 50,079 11.26

8. MonterreyGas Natural México, S.A. de C.V.

(Monterrey)7239 123,743 557,052 184.1

9. Nuevo Laredo,

Tamaulipas


(Nuevo Laredo)366 6,463 25,029 11.22

10. Ciudad JuárezGas Natural de Juárez, S.A. de

C.V.1828 35,209 129,045 12.74

11. Río PánucoGas Natural del Río Pánuco, S. de

R.L. de C.V. (Suez Energy)335 51,559 28,338 14.3

Distribution Permits Granted by the CRE

7272

Natural Gas - Distribution

LDC OwnerLength

(km)

Average

Volume

(m3/ d)

Expected Users

after Yr. 5

Investment

(US$

millions)*

12. Norte de Tamaulipas Tamauligas, S.A. de C.V. (GdF) 861 22,354 36,447 23.7

13. Distrito FederalComercializadora Metrogas, S.A.

de C.V. ( Gas Natural Mexico)2619 153,160 439,253 109.04

14. Valle Cuautitlán-TexcocoConsorcio Mexi-Gas, S.A. de C.V.

(GdF)3517 268,533 374,698 199.7

15. QuerétaroDistribuidora de Gas de Querétaro,

S.A. de C.V. (Suez Energy)870 64,434 50,001 47.2

16. Bajio Silao-León-

Irapuato


(Bajío)788 24,332 72,384 27.1

17. Torreón-Gómez Palacio-

Ciudad Lerdo-Durango

DGN la Laguna-Durango, S. de R.

de C.V. (Sempra)1030 38,647 50,084 35.4

18. Cananea, SonoraDistribuidora de Gas de Occidente,

S. A. de C.V.120 1,413 6,684 35.4

19. Zona Bajío NorteGas Natural México, S. A. de C.V.

(Bajío Norte)719 43,755 55,715 34.55

20. Puebla-Tlaxcala NATGASMEX, S. A. de C.V. (GdF) 919 93,054 68,196 34.81

21. GuadalajaraDistribuidora de Gas Natural de

Jalisco (Suez Energy)2185 257,797 180,558 83.6

* Total investment during 5 yr. build on

Distribution Permits Granted by the CRE

7373

Power Projects

Project Owner

Effective

Capacity

(MW)

Price

(Usc/kWh)Start-up operation

Investment

(US$ millions)

1. Merida III

AES Merida III (Nichimen

Corp. - AES Corp. - Grupo

Hermes)

484 2.85 June 9, 2000 230

2. Hermosillo Union Fenosa 250 3.605 October 1, 2001 164

3. Saltillo Electricité de France (EdF) 248 2.865 November 19, 2001 152.6

4. Tuxpan II Mitsubishi 495 2.754 December 15, 2001 281.1

5. Rio Bravo II EdF 495 2.565 January 18, 2002 220

6. Bajio (El Sauz) Tokyo Gas 495 2.94 March 9, 2002 450

7. Monterrey III Iberdrola 449 2.387 March 27, 2002 250

8. Altamira II EdF (51%) – Mitsubishi (49%) 495 2.90 May 1, 2002 278

9. Tuxpan III - IV Union Fenosa 983 2.78 May 23, 2003 616

10. Campeche TransAlta 252 3.09 May 28, 2003 216

11. Mexicali Intergen 489 3.19 July 20, 2003 335

12. Chihuahua III TransAlta 259 3.49 September 9, 2003 192

13. Naco Nogales Union Fenosa 258 3.44 October 4, 2003 135

14. Altamira III - IV Iberdrola 1,036 2.60 December 24, 2003 590

15. Rio Bravo III EdF 495 2.953 April 1, 2004 290

16. La Laguna II Iberdrola 498 3.5012 March 15, 2005 346

Independent Power Producers (IPPs) to date

7474

Power Projects

Project Owner

Effective

Capacity

(MW)

Price

(Usc/kWh)Start-up operation

Investment

(US$ millions)

17. Rio Bravo IV EdF 500 2.9328 April 1, 2005 290

18. Valladolid III Mitsui 525 3.599 June 27, 2006 320

19. Tuxpan V Mitsubishi 495 MXc 43.65 September 1, 2006 300

20. Altamira V Iberdrola 1,121 MXc 43.60 October 22, 2006 550

21. Tamazunchale Iberdrola 1,135 MXc 43.62 June 21, 2007 490

Independent Power Producers (IPPs) to date

7575

Power Projects

Project OwnerInstalled

Capacity (MW)Fuel

Arancia Arancia Corn Products 29 Natural Gas

Enertek Iberdrola 120 Natural Gas

Micase Grupo Minsa - Endesa 11 Natural Gas

Iberdrola Monterrey Iberdrola 619 Natural Gas

Energia Azteca VIII

(La Rosita)Integen 131 Natural Gas

Energia y Agua Puta de Cozumel Local consortium 32 Fuel Oil

Termoelectrica del Golfo CEMEX 250 Pet Coke

Termoelectrica Peñoles Grupo Peñoles 260 Pet Coke

Hidroelectricidad del Pacifico Inelec – Comexhidro 8 Hydro

Impulsora Mexicana de Energia Condumex – Almexa 24 Diesel

Bioenergia de Nuevo Leon Nuevo Leon state entities 7 Biogas

Vitro Suez Energy 284 Natural Gas

Agrogen Endesa 10 Diesel

Proveedora de Electricidad de Occidente Grupo Infra 19 Hydro

Italaise Endesa 4 Diesel

Private Cogeneration and Self-supply projects to date

76

Key Stakeholders Map and Perceived

Reform Evolution

12:30 pm – 3:30 pm

77

New Energy Sector Leaders & Inter-Play

President of Mexico

Felipe Calderon

Juan C. MouriñoPresident’s Chief of

Staff

Central Decision Makers

Agustin Carstens

Secretary of Finance

Jesus Reyes Heroles

PEMEX Director General

Georgina Kessel,

Secretary of Energy

Governors

Other Sources of Influence: Universities, Business Chambers,

Key Individuals, Oil & Gas Service Companies, etc.

Administrators

Unions

Congress

78

Felipe Calderon – President of Mexico

BACKGROUND

Law Degree from Escuela Libre de Derecho

Masters degree in Economics from ITAM and a Masters degree in

Public Administration from Harvard’s School of Government

OTHER POSITIONS

Dec 2006 – Dec 2012: President of Mexico

2005: PAN presidential candidate

Sep 2003 - May 2004: Secretary of Energy

Feb 2003 – Sep 2003: Director of the National Bank of Public Works and Services (Banobras)

2000-2003: Lower House Deputy, PAN Leader in the Lower House and President of the Lower

House Political Coordination Counsel

1996 – 1999: PAN Party President

1993: Secretary General of the PAN

1991-1993: Lower House Deputy

1986: President of the PAN’s youth movement

P PM T PB

Profile:

P= Politician

PM: Energy Policy Maker

T: Technical Energy

Expert

PB: Pro-Business

President Calderon has constructed his economic platform

based on a market oriented view, where strong institutions

and rule of law will play a significant role. During the first

months of his administration, he has centralized power,

attacked organized crime, addressed social issues and

negotiated pension reform. He appears to have a clear

reform agenda he wants to pursue.

SUPPORTERS

Business community

Financial sector

PAN (recent consolidation)

79

Mr. Mouriño is perceived to be the most relevant political

operator in the Calderon Administration. He is extremely close

to the President and is going to play a major role in any decision

making in the administration, including defining the extent of

reforms that will be pursued.

Juan Camilo Mouriño – President’s Chief of Staff

BACKGROUND

Degree in Economics from the University of Tampa, Florida

Masters degree in Accounting from La Universidad Autónoma de Campeche

OTHER POSITIONS

P PM T PB

Profile:

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Dec 2006 – to date: President Calderon’s Chief of Staff

2005: Coordinator of Felipe Calderon’s transition team

2004: Undersecretary of Electricity in SENER, when Felipe Calderon was

head of the ministry

2000 - 2003 : Federal Deputy and president of the Lower House Energy

Commission (not entire term)

2000: Coordinator of Fox’s presidential campaign in the Yucatan peninsula,

achieving important gains for the party

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS

Felipe Calderon

Regional support in Yucatan

Reactive Active

80

Carstens’ appointment as Secretary of Finance has been viewed

as very positive by both national and international markets. He is

widely expected to continue Mexico’s adherence to the disciplined

fiscal and monetary policies seen over the past decade.

Broadening and better enforcement of tax collection will be

Carstens’ biggest challenge in his new post.

Agustín Carstens – Secretary of Finance

BACKGROUND

Degree in Economics from ITAM (Instituto Tecnológico Autónomo de

México)

PhD in Economics from the University of Chicago

OTHER POSITIONS

P PM T PB

Profile:

Dec 2006 – to date: Secretary of Finance

2003 - Oct 2006 : Deputy Managing Director of the International Monetary

Fund (IMF)

2000-2003: Undersecretary of Finance and Public Credit

1999 - 2000: Executive Director at the IMF (representing Costa Rica, El

Salvador, Guatemala, Honduras, Mexico, Nicaragua, Spain and Venezuela)

Before first stint at the IMF, Carstens worked at Banco de México

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS

Felipe Calderon

Francisco Gil

Financial markets

Reactive Active

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

81

Kessel has a strong economic background, but not a technical

or political one. We do not see her leading the negotiations for

structural reforms but implementing them. Her background will

be crucial for discussing important issues such as PEMEX

mounting debt and fiscal contributions, among others.

Georgina Kessel - Secretary of Energy

BACKGROUND

Degree in Economics from ITAM (Instituto Tecnologico Autonomo de Mexico)

PhD in Economics from Columbia University, New York

OTHER POSITIONS

Dec 2006 – to date: Secretary of Energy

Jan 2002 - Dec 2006: General Director of “Casa de Moneda” (Mexico’s

National Mint)

Jul 1997 - Jan 2002: Secretary of Finance: In charge of Investment Office

and Decentralization of Mexico’s state-owned utilities.

Jan 1994 - Jan 1995: First Energy Regulatory Commission (CRE) President

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS

Felipe Calderon

Agustin Carstens

Francisco Gil Diaz

Santiago Levi

Fernando Sanchez UgarteReactive Active

P PM T PB

Profile:

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

82

He has considerable experience as a public servant and is no

stranger to the energy sector. His financial experience is also

noteworthy and reinforces the fact that finance will be a central

tenant of reform. Reyes Heróles has a particular interest in

increasing PEMEX operating efficiencies, regarding manpower

and bureaucratic issues. However, he is not a technical person

with petroleum operating experience. As a negotiator, his focus

will be on strengthening PEMEX, implementing reform,

discussions with the union and improving operating efficiencies.

Jesus Reyes Heróles – PEMEX Director General

BACKGROUND

Degree in Economics from ITAM

PhD in economics from the Massachusetts Institute of Technology

OTHER POSITIONS

P PM T PB

Profile:

2001: Founder of GEA (Grupo de Economistas Asociados)

1997 - 2000: Mexican Ambassador to the United States

1996 - 1997: Secretary of Energy

1994 - 1995: Director of Banobras (Mexico’s Social Development Bank)

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS Felipe Calderon

Guillermo Valdez

Ernesto Zedillo

Agustin Carstens

Labastida

Reactive Active

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

83

Impetus for Change

The decision making process of the current administration is extremely centralized. All important

negotiations are being handled directly through the office of the President.

Negative Positive

Centralizing all discussions

runs the risk of slowing down

the reform process

The reform agenda and priorities have been defined. In addition to

security and rule of law reforms, which are currently being discussed,

the top economic reforms are as follows:

1. Pension Reform (already approved)

2. Fiscal Reform (in process)

3. Energy Reform (pending)

Energy reform will be be highly contingent on the outcome of

fiscal reform negotiations, and in particular, on the negotiations

and agreements reached between the PRI and the PAN.

Calderon has a well-defined

reform agenda and appears to be

employing a clear political

strategy

84

Impetus for Change – Mexico’s Hydrocarbons Piñata

Hydrocarbons

Reform

Production

Challenges

Financial

Drain of PEMEX

Vested

Interests

Economic

Crisis

Access to

Capital

Access to

Technology

Drop in Crude

Production

Increasing

Imports

PIDIREGAS

Unsustainability

Lack of

Competition

Labor

Liabilities

Increasing

Social Spending &

Needs

Insufficient

Job Creation

Declining

Reserves

85

Drivers for Change

OBJECTIVE

The hydrocarbons reform ultimately introduced will depend on the drivers and goals being

sought by the Calderon Administration and the terms being negotiated with other actors:

TYPE OF REFORMDRIVERS

Maintaining Status Quo:

AVOID CRISIS

AND ENSURE

FISCAL RENT

(MYOPIC VIEW)

ENGLIGHTED,

LONG TERM

VIEW FOR THE

INDUSTRY

• PEMEX = government cash cow

• PEMEX retains full oversight of E&P

• Need increased investment; opt for more

private participation in upstream,

downstream & non-strategic areas

• Goal: sustain production levels

Partial

• Amend secondary laws (stretch

legal framework for upstream)

• Preservation of status quo in

methods of inviting and

awarding of contracts

Creating a Dynamic Hydrocarbon Industry Comprehensive

• Constitutional reforms (Art. 27

& 28; also requires secondary

legislative changes)

• Create a fully independent

regulator

• Create a new tax regime

• New contracting, labor &

environmental laws

Partial Upstream Participation:

• Need increased investment & production

• Opening up spaces for private

participation in E&P (expanded service

contracts)

• Goal: sustain production levels/ attract

better technology

Partial Plus• Amend secondary laws (signif-

icantly stretch legal framework)

• Creation of expanded service

contracts

• Preservation of status quo in

methods of inviting and

awarding of contracts

• Full opening of the hydrocarbons sector

• Optimize exploitation of resources

• Demand use of best technology

• Ensure a state role in the sector

• Develop a dynamic domestic service

industry and create local know how

• Increase tax revenue & economic activity

86

Possible Alliances and Conflicts Maps

87

Presidency - Support Map

Felipe

Calderon

Juan Camilo

Mouriño

Dionisio Perez - Jácome

Jordy Herrera

Alejandra

Sota

Maximiliano

Cortázar

Ernesto

Cordero

Cesar

Nava

Germán

Martínez

88

Felipe Calderon

Francisco

Labastida

Ricardo

Aldana

David

Maldonado

Romero

DeschampsGeorgina

Kessel

Mario G.

BudeboJordy

Herrera

Rafael

Alexandri*

Aldo

Flores

J. Reyes

Heróles

Carlos

Morales G.

Vinicio

Suro

Sergio

Guaso

Esteban

Levín

Raúl

Livas

Juan C. Mouriño

Ernesto

Cordero

Fernando

Sanchez

Alejandro

Werner

PEMEX SENER SHCP

Agustin

Carstens

Personal Relationship / Alliance Negotiated / Imposed

Strictly Working Relationship

Policy Makers Support Map (Presidency) - Hydrocarbons Reform

* No longer in SENER

89

Policy Makers Support Map (Inter-Institutional)

Personal Relationship / Alliance Negotiated / Imposed

Strictly Working Relationship

Francisco

LabastidaRicardo

Aldana

David

Maldonado

Romero

Deschamps

Georgina

Kessel

Mario G.

BudeboJordy

Herrera

Aldo

Flores

J. Reyes

Heróles

Carlos

Morales G.

Vinicio

Suro

Sergio

Guaso

Esteban

Levín

Raúl

Livas

Ernesto

Cordero

Fernando

Sanchez

Alejandro

Werner

PEMEX SENER SHCP

Agustin

Carstens

Rafael

Alexandri*


90

Policy Makers CONFLICT Map - Hydrocarbons Reform

Francisco

LabastidaRicardo

AldanaRomero

Deschamps

Georgina

Kessel

Mario G.

BudeboJordy

Herrera

Aldo

Flores

J. Reyes

Heróles

Carlos

Morales G.

Vinicio

Suro

Sergio

Guaso

Esteban

Levín

Raúl

Livas

Ernesto

Cordero

Fernando

Sanchez

Alejandro

Werner

PEMEX SENER SHCP

Agustin

Carstens

Personal Conflict Professional Conflict Potential Conflict

Juan C. Mouriño

Rafael

Alexandri*


91

SENER Support Map - Hydrocarbons Reform

Georgina Kessel

M. Gabriel

Budebo

Jordy

Herrera

Mauro

Díaz

Aldo

Flores

Rafael

Alexandri*

Juan C.

Zepeda

Cesar

BaldomeroDiego

Arjona

Emiliano

Pedraza

Verónica

Irastorza

Isolated

Personal Relationship / Alliance Negotiated / Imposed Strictly Working Relationship


92

SENER Conflict Map – Hydrocarbons Reform

M. Gabriel

Budebo

Jordy

Herrera

Mauro

Díaz

Aldo

Flores

Rafael

Alexandri*

Juan C.

Zepeda

Cesar

BaldomeroDiego

Arjona

Emiliano

Pedraza

Verónica

Irastorza

Georgina Kessel

Personal Conflict Professional Conflict Potential Conflict Isolated


93Conflict :

PGPB Support and Conflict Map

Roberto Ramírez Soberón

PGPB

General Director

Armando

Arenas

Production

Deputy

Director

Victor

Dominguez*

Pipelines

Deputy

Director

Felipe Luna

Natural Gas

Deputy

Director

Miguel

Bueno*

LPG and

PPQ Deputy

Director

Salvador

Ortiz

Planning

Deputy

Director

Agustin

Castro

Management

and Finance

Deputy

Director


Support :


* Acting Deputy Director

94

Natural Gas and LNG Decision Makers - CFE

Alfredo Elias AyubGeneral Director

Eugenio LarisDirector for Third-Party

Financed Projects

Francisco SantoyoFinance Director

Alberto RamosDeputy Director for

Project Development

Juan

GranadosManager, Projects

Eduardo BuendíaJr. Manager

Nestor MorenoOperations Director

Jesus BuentelloFuel Manager

Project Development

Guillermo

FernandezLegal Coordinator

Francisco De la ParraNatural Gas Manager

Operations

Legal and Financial

95

Consensus in Defining Energy Reform?

96

Neutral

Proposed Legislative Reforms to Date – Policy Makers

PEMEX budgetary autonomy

Increased standards of

transparency and efficiency

Private sector investment in

refining

Private sector Investment in

petrochemicals

Giving more money to PEMEX/

Allow it to retain more money

Opening private participation

in non associated natural gas

Allow PEMEX more flexibility

in how it buys goods/services

Competition in E&P

PEMEX entering JVs in E&P

Corporate governance

Consolidation of PEMEX into

one single entity

OP

ER

AT

ION

AL

OP

EN

ING

FIN

AN

CIA

L

Creation of a regulatory body

PEMEX stock issuance

Administrative and

operational autonomy

Calderon SHCP SENER PEMEX

New Mgmt

Old Guard

Executives

PEMEX

Union

Neutral

Neutral

X

Neutral

Neutral

Neutral

X

Neutral

Neutral

Neutral

Neutral

Neutral

Neutral

Neutral

Neutral

Neutral

X

X

X

X

Neutral

X

X

X

Neutral

X

X

Neutral

Neutral

X

Neutral

X

X

X

X

X

X

97



refining


petrochemicals



Competition in E&P




one single entity

OP

ER

AT

ION

AL

OP

EN

ING

FIN

AN

CIA

L



Administrative and


PAN PRD PRI







Neutral

Neutral

Neutral

Neutral

Neutral

X

X

X

X

X

X

X

X

Neutral

Neutral

?

?

?

Neutral

Neutral

Neutral

Neutral

General

Public

Neutral

Neutral

Neutral

Neutral

Neutral

?

Neutral

Neutral

Neutral

?

?

Proposed Legislative Reforms to Date - Political

98



refining


petrochemicals



Competition in E&P




one single entity

OP

ER

AT

ION

AL

OP

EN

ING

FIN

AN

CIA

L



Administrative and


IOC’s Carlos

SlimMonterrey

Industrials

Business

Chambers

Service

Companies







Neutral

Neutral

Neutral

Neutral

Neutral

X

X

X

X

Neutral

Neutral

Neutral

Neutral

Neutral

Neutral

Neutral

Neutral

Neutral

X

*

*

*

*

*

*

Neutral

Neutral

Neutral

Neutral

Neutral

Neutral

Neutral

Neutral

Neutral

Neutral

Neutral

Neutral

Neutral

Neutral

Neutral

Neutral

Neutral

Neutral

Neutral

Neutral

Neutral

Neutral

Proposed Legislative Reforms to Date – Other Players

99

Potential Consensus Based on Proposals to Date

Fiscal reform

PEMEX consolidation

Transparency and efficiency

Reform of Public Works & Acquisition Laws


Stock issuance

Creation of a regulator

Broad Consensus (all parties)

Broad Consensus

(PRI/ PAN)

Potential Consensus

Private participation in

refining and petrochemicals


in non-associated natural

gas

JVs and competition in E&P

Allow PEMEX more flexibility in

how it buys goods/services

Broad Consensus (PRI/

PRD)

Give more money to PEMEX/


Potential Consensus

(PAN/ PRD)

100

Legislative Voting Scenarios

101

Lower House Composition – LX Legislature (2006 – 2009)

POLITICAL PARTY

PAN

PRD

PRI

PVEM

CONVERGENCIA

PT

NUEVA ALIANZA

ALTERNATIVA

WITHOUT PARTY

DEPUTIES

206

127

106

17

17

11

9

5

2

AS %

43%

25%

21%

3%

3%

2%

2%

1%

0%

TOTAL 500 100%

102

Lower House Scenarios – Simple Majority

Scenario # 1

Without Party Total

206 (100%)

13 (12%)

0 (0%)

17 (100%)

1 (100%)

0 (0%)

0 (0%)

9 (100%)

5 (100%)

251 (50.14%)

Scenario # 2

Without Party Total

150 (73%)

77 (73%)

0 (0%)

12 (73%)

1 (100%)

0 (0%)

0 (0%)

7 (73%)

4 (73%)

251 (50.28%)

Without Party

Without Party

103

Lower House Scenarios – Super Majority

Scenario # 1

Scenario # 2

Total

200 (97%)

103 (97%)

0 (0%)

16 (97%)

1 (100%)

0 (0%)

0 (0%)

9 (97%)

5 (97%)

Without Party

Total

206 (100%)

106 (100%)

0 (0%)

17 (100%)

1 (100%)

0 (0%)

0 (0%)

9 (100%)

5 (100%)

Without Party

Total

177 (86%)

91 (86%)

32 (25%)

15 (86%)

1 (100%)

4 (25%)

3 (25%)

8 (86%)

4 (86%)

Without Party

Scenario # 3

344 (68.80%)

344 (66.74%)

335 (67.00%)

104

Lower House Scenarios – Reforma Poll

Reforma Poll Scenario : Support for Constitutional Changes

Total

203 (98%)

61 (58%)

48 (38%)

17 (98%)

1 (71%)

6 (38%)

5 (38%)

9 (98%)

5 (98%)

Without Party 354 (71%)

Source: IPD Latin America based on the Reforma Poll conducted from February 6 through April 2,

2007. The poll consisted of a survey involving 280 Lower House deputies (56 percent of the 500

member body) that were asked whether or not they would support constitutional changes in terms of

energy.

NOTE: IPD extrapolated the percentages highlighted in orange based on survey results, since the

support for parties other than PAN, PRD and PRI were only shown in aggregate form.

105

Senate Composition – LX and LXI Legislatures

(2006 – 2012)

POLITICAL PARTY

PAN

PRI

PRD

PVEM

CONVERGENCIA

PT

TOTAL

WITHOUT PARTY

SENATORS

52

33

26

6

5

5

1

128

AS %

41%

26%

20%

5%

4%

4%

1%

100%

Source: IPD Latin America, based on Lower House and Senate

106

Senate Scenarios – Simple Majority

Scenario # 1 Scenario # 2

Without Party

Total

36 (70%)

23 (70%)

0 (0%)

4 (70%)

1 (100%)

0 (0%)

0 (0%)

65 (50.55%)

Without Party

Total

52 (100%)

5 (16%)

0 (0%)

6 (100%)

1 (100%)

0 (0%)

0 (0%)

64 (50.22%)

Without Party

Without Party

107

Senate Scenarios – Super Majority

Scenario # 1

Without Party

Total

52 (100%)

33 (100%)

0 (0%)

6 (100%)

1 (100%)

0 (0%)

0 (0%)

92 (71.88%)

Scenario # 2

Without Party

Total

48 (93%)

31 (93%)

0 (0%)

6 (93%)

1 (100%)

0 (0%)

0 (0%)

86 (66.90%)

Without Party

Total

43 (83%)

27 (83%)

7 (25%)

5 (83%)

1 (100%)

1 (25%)

1 (25%)

86 (66.82%)

Scenario # 3

Without Party

Without Party

INDEPENDENT

PT

CONVERGENCIA

108

States and Super Majority Vote

Constitutional reforms require a super-majority vote in Congress, which implies a

two-thirds vote in both the Lower House and the Senate; it also requires approval by

a simple majority from Mexico’s 31 state legislatures, each with a simple majority

vote (i.e. 16 states must pass the constitutional reforms by 51% or more).

We would note that Mexico City (the Federal District) is not treated as a state and

would not vote on constitutional matters.

The PRI controls the largest number of seats in 20 of the 31 state legislatures (it

shares this position in two states with the PAN and in two states with the PRD).

Of these 20 states, the PRI has a 50% or more majority in 10 of the 31 state

legislatures.

The PAN holds the largest number of seats in 9 of the 31 state legislatures (two

shared with the PRI). Of these 9 states, the PAN has a 50% or more majority in 5

state legislatures.

Based on our analysis, if the PAN were able to secure the full support of the PRI,

it would be able to secure at least a simple majority in 17 states (this does not

include simple majorities formed via PAN-PRI coalition support).

The PRD, on the other hand, only has the largest number of seats in 6 state

legislatures, of which two are shared with the PRI. The PRD holds a super

majority position in one state legislature, Baja California Sur; it holds no simple

majority positions.

109

Items to Consider

110

Convergence

Partial ReformStatus Quo Comprehensive Reform

Union

PEMEX

Old Guard

PRD

• Party fracturing / Individual or group

interest(s)

• Social pressure for change

• Economic crisis

• PEMEX financial crisis

• Reach agreement with

union leaders

Non-Negotiable

PRI

PAN

Calderon• Ability to substitute

current dependence on

PEMEX tax revenue

contribution

• Excessive political

cost

• Win political spaces

• Economic crisis

• Political negotiations

• Excessive political

cost

Business

Chambers• More business opportunities

• Economic growth

• Perceived increased energy

prices from reform

• Maintaining existing subsidies

Society• Demand for increased

economic growth

• Jobs

• Threat of economic crisis

• Ignorance

111

Universities

Public

Media and

NGOs

Hydrocarbons Reform Key Players

LEVEL OF

INTEREST

POWER

High

Low

President Calderon/

High

Monitor (Minimum effort) Keep informed

Keep satisfied Manage closely

Juan Camilo Mouriño

CFE Director

SENER senior and mid-

level executives

Unions

PEMEX

senior and

mid-level

executives

Business

Chambers:

CONCAMIN, C

OPARMEX

Secretary of Energy/

Secretary of Finance/

PEMEX Director

Influential

business leaders

Oil & Gas service

companies

IMP

Governors

IOCs

Lower House

and Senate

Energy

Commissions

112

Profiles Other Relevant Players

1. Political Parties

2. Governors

3. Others

Universities

Industrial Chambers

Oil & Gas Service Companies

Influential Business Leaders

4. Support Profiles

113

Issues to Consider

Is the time for comprehensive hydrocarbons reforms

here? (Pre-midterm vs. Post-midterm elections?)

Do the rules of the past still apply?

Is there a hydrocarbons reform champion?

Are all of the elements in place for sustainable

hydrocarbons reform?

Is there a need to re-evaluate approach and philosophy?

Where is your time and money best spent? And with

whom?

114

Political Parties

115

Andres Manuel Lopez Obrador - AMLO

BACKGROUND

Degree in Public Administration from the National Autonomous University of

Mexico (UNAM)

OTHER POSITIONS

2007 – to date: Leader of a civil resistance movement contesting the results of the

2006 presidential election. AMLO proclaimed himself as Mexico’s “legitimate

president”

2005 – 2006: Presidential Candidate of Mexico

2000-2005: He was elected Mexico City Major

1996 to 1999: PRD president

1994: Ran for the governorship of his native state, Tabasco, losing to Roberto Madrazo

1989: Joined the PRD (He left the PRI in 1988 to support the presidential campaign of

Cuauhtémoc Cárdenas. He joined the PRI in 1976).

P PM T PB

Profile:

P= Politician


T: Technical Energy

Expert

PB: Pro-Business SUPPORTERS

Carlos Slim*

Marcelo Ebrard*

Camacho SolisActive

Level of Interest

Po

we

r

-

Manage

closely

Reactive

Despite the fact that AMLO has lost considerable strength since losing

the 2006 presidency, he continues to be relevant due to his support by an

important fraction of the PRD. He will strongly oppose any attempts at

energy reforms calling them further stages of privatization and will ally

himself with unions to further his views/ cause. AMLO can be expected to

deploy the masses to maintain the emotional psychology that still

surrounds PEMEX. He will also use the media. AMLO will almost certainly

make a bid for the 2012 presidency. He continues to travel the country on

a regular basis to gain and maintain popular support.

http://www.gobiernolegitimo.org.mx/trayectoria/

116

Cuauhtémoc Cardenas

Cardenas remains one of the most important figures of the

Mexican left, and still enjoys a great deal of popularity within

the PRD’s traditional base. In the energy context, due to his

symbolic importance -- both as the son of the president who

nationalized the energy industry and created PEMEX, and the

moral leader of the left -- his support of any sort of energy

reform could be crucial as it relates to the PRD.

BACKGROUND

Degree in Civil Engineering from the UNAM

OTHER POSITIONS

2000: Third time Cardenas ran for Mexico’s presidency

1997-1999: Cardenas became the first elected Mayor of Mexico City

1994: Second time Cardenas ran for Mexico’s presidency

1989: Cárdenas forms the PRD political party. In 1987 he attempted to form a

leftist caucus within the PRI to oppose the emergence of the party’s

technocrats and their efforts to open-up the economy and he failed to do so.

1988: First time Cárdenas ran for Mexico’s presidency.

1980-1986: Governor of the state of Michoacán

1976-1982: Senator for the state of Michoacán

P PM T PB

Profile:

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

ActiveReactive

SUPPORTERS

Moderate PRD

Po

we

r

-

Manage

closely

117

Marcelo Ebrard

BACKGROUND

Degree in International Relations from El Colegio de México

OTHER POSITIONS

2006-2012: Ebrard was elected of Mexico City Major

2000-2006: Ebrard served under AMLO’s Mexico City mayoral administration

first as Secretary of Public Security and then as Secretary of Social

Development

1997-2000: Ebrard successfully ran as an independent Lower House deputy

1995: Ebrard left the PRI with Manuel Camacho Solis to found the now-extinct

Party of the Democratic Center (Partido del Centro Democratico – PCD)

1992: Mexico City’s general secretary of government under Manuel Camacho

Solis’ mayoral term

P PM T PB

Profile:

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Level of Interest

Po

we

r

-

Manage

closely

Ebrard could become the new face of the PRD and is

likely to vie for Mexico’s presidency in 2012. He has

distanced himself from AMLO and wants to be perceived

as a suitable and more rational and progressive

alternative than his predecessor.

ActiveReactive

SUPPORTERS

Segments of PRD

Camacho Solis

Local interest groups*

118

Beatriz Paredes

Paredes has proved to be a good negotiator capable of reaching

agreements with her political opponents. She and Felipe Calderón

have worked together in the past, when both served together as

coordinators of their respective political factions in the Lower House.

As President of the PRI, she will play an extremely relevant role in

defining and projecting her party’s stance regarding energy.

BACKGROUND

Degree in Sociology from UNAM

OTHER POSITIONS

2007: She was elected president of the PRI

2006: She unsuccessfully ran for Mexico City Mayor

2001 - 2002: Lower House deputy and Coordinator of the PRI legislators in

the Lower House

1994 - 2000: She held a senate post

1993: She served as Undersecretary of the Interior

1987 - 1992: She was elected Governor of the State of Tlaxcala

1976: Paredes joined the PRI

P PM T PB

Profile:

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Level of Interest

Po

we

r

-

Manage

closely

ActiveReactive

SUPPORTERS

PRI bases

PRI governors*

Heladio Ramirez

*With the exception of: Coahuila, Nuevo Leon, Quintana Roo, Sinaloa,

Sonora and Veracruz

http://es.wikipedia.org/wiki/Imagen:Beatriz_Paredes.jpg

119

Manuel Bartlett

Bartlett has been one of the most fervent opponents to

opening up the energy sector, particularly regarding

electricity. As a senator, he vehemently opposed any

foreign participation in Mexico’s hydrocarbon resources.

His statements continue to have a media impact, and as

such he remains relevant. He is a highly seasoned and

opportunistic politician.

BACKGROUND

Degree in Public Law from the University of Paris

PhD. in Political Sciences from UNAM

OTHER POSITIONS

2000-2006: Held a senate position

1993- 1999: He was elected governor of the state of Puebla

1988-1992: Secretary of Education during Carlos Salinas de Gortari

administration

1982 – 1988: Secretary of Interior during President Miguel de la Madrid

administration

P PM T PB

Profile:

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Level of Interest

Po

we

r

-

Manage

closely

ActiveReactive

SUPPORTERS

Traditional PRI

AMLO

Ricardo Monreal

Arturo Nuñez

http://es.wikipedia.org/wiki/Imagen:Manuel_Bartlett_Diaz.jpg

120

Elba Esther Gordillo

BACKGROUND

Originally a teacher and social worker

OTHER POSITIONS

2006: Gordillo was expelled from the PRI due to her involvement in the creation of

Nueva Alianza, and for not acting in her party’s best interest

2002-2005: PRI Secretary General

2004: Gordillo becomes the national leader of the SNTE

1997-2002: PRI General Secretary of the Council on National Organizations

1989: Gordillo was elected General Secretary of the SNTE and became its national

leader in March 2004

1986-1987: Secretary of the PRI National Executive Council

1960: Gordillo joins the PRI, also becoming a member of the National Education

Workers’ Union (SNTE)

P PM T PB

Profile:

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Level of Interest

Po

we

r

-

Manage

closely

In 2006, La Maestra proved her political muscle by openly

sabotaging Roberto Madrazo’s presidential campaign using

her influence in the SNTE to backing Felipe Calderon.

Despite the fact that her leadership has been eroded as a

result of the internal conflicts with some factions of the

union, she continues to enjoy wide support by the majority

of the union, and will continue to play a very relevant role in

Mexican politics and the negotiation of future reforms.

ActiveReactive

SUPPORTERS

Calderon

SNTE

PANAL leadership

http://images.google.com/imgres?imgurl=http://www.poresto.net/v06/images/2006/diciembre/16/republica/elba.jpg&imgrefurl=http://senderodelpeje.blogspot.com/2006_12_17_archive.html&h=376&w=250&sz=23&hl=en&start=15&um=1&tbnid=t1wNEIT8oeicWM:&tbnh=122&tbnw=81&prev=/images%3Fq%3DElba%2BEsther%2BGordillo%26ndsp%3D20%26svnum%3D10%26um%3D1%26hl%3Den%26rls%3DFUJA,FUJA:2005-27,FUJA:en%26sa%3DN

121

Manuel Espino

BACKGROUND

Degree in Business Administration from Universidad del Noroeste de

Sonora

OTHER POSITIONS

2005-to date: President of the PAN

2002-2004: Secretary General of the National Executive Committee from

PAN president in Sonora

1978: Joined the PAN

P PM T PB

Profile:

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Po

we

r

-

Manage

closely

In 2005 Manuel Espino became president of the PAN. At that

time the party was defining who their presidential candidate

was going to be and Espino openly supported Santiago Creel,

creating tensions with Felipe Calderon.

Espino has openly criticized Calderon, stating he wants to

control the party. This has created factions within the PAN and

recently has alienated Espino, who now appears to have lost all

relevant support within the party as Calderon has consolidated

his.

ActiveReactive

SUPPORTERS

Vicente Fox

Santiago Creel

Most conservative fractions

of the PAN

122

Governors

123

Governors - New Generation of Key Players

Governor José Natividad González Parás, Nuevo Leon

Governor Eugenio Hernandez, Tamaulipas

Governor Fidel Herrera, Veracruz

Governor Andrés Granier , Tabasco

Governor Jorge Carlos Hurtado,

Campeche

Because of the economic impact that any hydrocarbons reform would have on

individual states, we expect governors to play a more proactive role as

discussions move forward. These are some of the most relevant states to keep in

mind, either because of their economic relevance or because of their

participation in terms of hydrocarbons production. Interestingly, but perhaps not

surprisingly, they are all governed by PRI governors.

New Elected Governor

Jose Guadalupe Osuna Millan

124

José Guadalupe Osuna Millán – Elected Baja California Governor

BACKGROUND Economics degree from the Universidad Autónoma de Baja California

Master's Degree in Economic Sciences from the Instituto Politécnico

Nacional

OTHER POSITIONS

He joined the PAN in 1992

2007– 2013: Elected governor of Baja California

2003 – 2006: Federal deputy in the LIX Legislature

1998 – 2000: Director of Baja California Water Commission

1995 – 1998: Mayor of Tijuana

1990 – 1995: Director of Tijuana’s Public Services State Commission

(CESPT)

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS

Eugenio Elorduy

Manuel EspinoReactive Active

Profile:

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Too early to say

It is still too early to speculate what kind of governorship Osuna is

interested in exercising. That said, addressing the state’s

increasing violence and social unrest related to crime, drug

trafficking, poor education levels and insufficient job creation is a

MUST if the PAN wants to maintain control of the state.

125

Baja California – General Overview

Population*

State Contribution to

National GDP 3.35%

Trade, restaurants and hotels play a major role in the

state’s economy contributing with 28% of the state’s

GDP.

Manufacturing plays the leading role in Baja

California’s economy, making up 22% of the state’s

GDP.

Other major sectors are service industry, which

accounts for 18% of the state’s GDP.

Governor (2007 – 2013) José Guadalupe Osuna Millán (PAN – PANAL

Partido Encuentro Social)

Current State Congress

Composition –

DIRECTLY ELECTED

SEATS**

Source: IPD Latin America based on INEGI, BANCOMEXT and Tamaulipas Government

*Based on INEGI’s 2005 Census

** On August 5, 2007 only 16 local congressmen were directly elected. At this time, there is no indication of exactly how the

remaining 12 congressional seats assigned via proportional representation will be distributed among the political parties.

14 (88%)2 (13%) 0 (0%)

OTHERS

0 (0%)

State Main Activities

2,844,469

http://en.wikipedia.org/wiki/Image:Escudo_Baja_California_Norte.gif

126

Oil and Gas Production Contribution by State

Campeche, 78%

Tabasco18%

Veracruz, 2%

Chiapas, 1%

Tamaulipas, 1%

Oil Production

Chiapas - 5.61%

Nuevo Leon - 7.43%

Veracruz - 16.00%

Tamaulipas - 18.00%

Tabasco – 25.93%

Campeche – 26.74%

Natural Gas Production

127

Nuevo Leon – General Overview

Population 4,199,292


National GDP7.33%

(3rd place after D.F. and EDOMEX)


Manufacturing plays the leading role in Nuevo

Leon’s economy, making up 25.5% of the state’s

GDP.

The state is home of powerful conglomerates,

including: Cemex, Bimbo, Maseca and Banorte

Other major sectors are service industry and

trade (25.2%), restaurants and hotels (18.7%).

Governor (2003 – 2009) José Natividad González Parás, Nuevo Leon

(PRI/PVEM)


Composition

Source: IPD Latin America based on INEGI, BANCOMEXT and Nuevo Leon Government

11 (26%)23 (55%) 1 (2%)

OTHERS

7 (17%)


Oil and Gas productionOil: 0% Gas: 7.4%

128

José Natividad González Parás - Nuevo Leon Governor

In terms of energy reforms, Mr. González Parás could be relevant

for gaining support within the PRI. Although he is not considered

to be close to Beatriz Paredes (PRI president), he is a practical

man that has been outspoken regarding the importance of

undertaken crucial structural reforms, including: comprehensive

fiscal reform, energy reform (ensuring access to competitive

prices), and labor reform (greater flexibility in the hiring process).

BACKGROUND

Law degree from the Universidad Autónoma de Nuevo León

PhD in Political Sciences from the University of Paris, France

OTHER POSITIONS

Profile:

He joined the PRI in 1967

2003 - 2009: Governor of the state of Nuevo Leon

For some years he served as Undersecretary of political development

at the Mexican Secretariat of the Interior during the Ernesto Zedillo

administration (2000 – 1994)

1991 – 1985: Nuevo Leon secretary general

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS

Monterrey industrial base

Eugenio Hernández (Tamaulipas

Governor)

Senator Eloy CantúReactive Active

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

129

Tamaulipas – General Overview



National GDP 3.3%

Trade, restaurants and hotels play a major role in the

state’s economy contributing with 22% of the state’s

GDP. Manufacturing contributes 21.3%; service industry , 17.6%; transportation, warehousing and

communications, 14.6%.

The State also has petro-chemical industries and

refinery facilities in Ciudad Madero.

Governor (2005 – 2011) Eugenio Hernandez Flores (PRI)


Composition

Source: IPD Latin America based on INEGI, BANCOMEXT and Tamaulipas Government

9 (28%)19 (59%) 2 (6%)

OTHERS

2 (6%)


Oil and Gas productionOil: 0.57% Gas: 18%


130

Eugenio Hernandez - Tamaulipas Governor

Mr. Hernandez is a progressive politician with experience in the

business world. Back in 2000, he served as campaign manager for

Francisco Labastida’s presidential campaign in the State of

Tamaulipas. Hernandez could be relevant for gaining support for

energy reforms within the PRI. As nephew of La Quina, he maintains

good relations with a portion of the unions. However, being pro-

business, he could serve as an important bridge in any PEMEX reform

discussions.

BACKGROUND

Degree in Civil Engineer from Instituto Tecnológico y de Estudios

Superiores de Monterrey (ITESM)

OTHER POSITIONS

2005 - 2011: Governor of the state of Tamaulipas

2000 – 2003: Federal Deputy

He served as President of the Mexican Chamber of the Construction

Industry (CMIC: Cámara Mexicana de la Industria de la Construcción)

and is an active member of COPARMEX.

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS

Natividad Gonzalez Paras (Nuevo Leon

governor)

Some groups within PEMEX unionReactive Active

Profile:

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

131

Veracruz – General Overview



National GDP 4.14%

The service industry plays an important role in

Veracruz, contributing 19.9% of the state’s GDP,

followed by trade, restaurants and hotels (15.9%), and

financial services, insurance and rental activities

(15.7%).

In the manufacturing industry, food products,

beverages, tobacco, chemicals and basic metal

substances are the main products.

Governor (2004 – 2010) Fidel Herrera Beltrán (PRI)


Composition

Source: IPD Latin America based on INEGI, BANCOMEXT and Veracruz Government

21 (42%)21 (42%) 6 (12%)

OTHERS

2 (4%)


Oil and Gas productionOil: 1.98% Gas: 16%


132

Fidel Herrera Beltrán - Veracruz Governor

Mr. Herrera will play an important role in terms of reforms, simply

because he governs the third most populated state of the country.

Although he is an old school priista, he will not necessarily follow

his party line, he is an opportunist. During his administration, he

has been severely criticized for excessive spending on promoting

his image and having a personal agenda.

BACKGROUND

Law degree from the UNAM (Universidad Nacional Autónoma de

México)

OTHER POSITIONS

2004 - 2010: Governor of the state of Veracruz

2003 -2004: Senator in the LIX legislature

1997 – 2000: Lower House deputy

Fidel Herrera was also PRI representative before the IFE

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS

Miguel Alamán Velazco

Traditional priistasReactive Active

Profile:

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

133

Tabasco – General Overview



National GDP1.15%

Tabasco is the most important state in terms of

oil and gas production.

The service industry accounts for 25.9% of the

state’s GDP while mining represents 17.4%;

trade, restaurants and hotels, 15.2%; financial

services, insurance, real estate and rental

activities, 14.8%.

Governor (2007 - 2012) Andrés Granier Melo (PRI)


Composition

Source: IPD Latin America based on INEGI, BANCOMEXT and Tabasco Government

14 (40%) 3 (9%)14 (40%)

OTHERS

4 (11%)


Oil and Gas productionOil: 18.36% Gas: 25.93%


134

Andrés Granier Melo - Tabasco Governor

Because of the importance the state plays in terms of

hydrocarbons, we believe Mr. Granier could play an important role

in future energy negotiations.

BACKGROUND

Masters in State and Municipal Public Administration from

Universidad Nacional Autónoma de México (UNAM)

OTHER POSITIONS

Profile:

2000 to 2003 He served as Mayor of Centro, a municipality in Tabasco

1995 – 1997: Director of Social Development of the Centro a

municipality in Tabasco that has its municipal seat in Villahermosa,

the capital city of the state

In 1982 he worked in the Tabasco General Attorney’s Office on health

related issues.

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS

Roberto Madrazo

Reactive Active

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

135

Campeche – General Overview

Population 754,730


National GDP1.19%

Extraction is the major industry in Campeche,

representing 55.4% of the entity’s GDP.

The service industry as a whole accounts for

17.4% of the state’s GDP; trade, restaurants and

hotels account for 9.7%. Regarding industry,

there are important sugar, wheat flour and

cookie producing companies as well as soft

drink bottling enterprises.

Governor (2003 - 2009) Jorge Carlos Hurtado Valdez (PRI)


Composition

Source: IPD Latin America based on INEGI, BANCOMEXT and Campeche Government

13 (37%)16 (46%) 3 (9%)


Oil and Gas productionOil: 77.91% Gas: 26.74%

OTHERS

3 (9%)


136

Jorge Carlos Hurtado Valdez - Campeche Governor

Hurtado is a progressive politician. As governor of Tabasco he

faces the challenge of increase funds and infrastructure

development for his state. We believe that he could support an

energy reform if it could translate in more resources for his state.

BACKGROUND

Degree in Public Accounting from Universidad Autónoma del

Sudeste

Degree in Political Sciences and Public Administration from

Universidad Autónoma del Sudeste

OTHER POSITIONS

Profile:

2003 – 2009: Governor of Campeche

2000 – 2002: Mayor of Campeche

1997 – 2000: Secretary of Public Works and Communication for the

state of Campeche

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS

Alfredo del Mazo

Arturo Montiel

Enrique Peña NietoReactive Active

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

137

Other Relevant Players

138

Universities

The most relevant universities that to some extent influence the energy debate are:

UNAM

The UNAM produces the highest amount of research in the

country and as the national university, it is relevant in terms

of public opinion. It receives major funding from Carlos Slim.

The UNAM comprises a group of analysts that oppose energy

reform and advise the PRD in matters of energy, including:

The COLMEX is considered one of Mexico’s best

institutions. Increasingly, it is participating in

energy related seminars and conferences, raising

relevant issues for debate. Among the professors

interested in the subject, we find:

The ITAM is considered to be one of the best

universities in economic related topics. Several

members of the current cabinet are ITAM alumni,

including:

• President, Felipe Calderon

• Secretary of Finance, Agustin Carstens

• Secretary of Energy, Georgina Kessel

• PEMEX General Director, Jesús Reyes Heróles

• Victor Rodríguez Padilla

• Fabio Barbosa Cano

• Rocio Vargas

• Isabelle Rousseau

• Alejandro Castañeda

139

Industrial Chambers

In our view, industrial chambers and organizations could play an increasingly

relevant role in energy reform discussions.

Since Mexico’s balance of power shifted from a powerful presidential figure to a

more “balanced” system in which negotiations are essential, having a more

proactive business community that is vocal on issues that matter is extremely

beneficial and is an important component of a mature democracy.

Because of their influence, two of the most relevant chambers are:

Factions of both COPARMEX and CONCAMIN have been pushing in favor of energy

reform, arguing that the lack of competition in the sector negatively affects the

competitiveness of Mexico’s industry as a whole. However, there remains a lack of

broad consensus in favor of energy reform within both of these chambers.

CONCAMIN is the Mexican Confederation of Industrial Chambers.

COPARMEX is the Mexican Employers' Association.

Both chambers host Mexico's most influential business men and

they have been strongly linked to the PAN, with many of the party’s

leaders coming from these organizations.

http://www.coparmex.org.mx/index.php

http://images.google.com/imgres?imgurl=http://www.economia-snci.gob.mx/sphp_images/logos/concamin.gif&imgrefurl=http://www.economia-snci.gob.mx/sphp_pages/faci_negocios/consejo_com_his.htm&h=152&w=150&sz=8&hl=en&start=1&um=1&tbnid=rypXcrZ0oWTsSM:&tbnh=96&tbnw=95&prev=/images%3Fq%3Dconcamin%26svnum%3D10%26um%3D1%26hl%3Den%26rls%3DFUJA,FUJA:2005-27,FUJA:en%26sa%3DN

140

Oil and Gas Service Companies

Dowell - Schlumberger (50% Schlumberger, 50% Dow Chemical) : A subsidiary of

Schlumberger, Dowell Schlumberger is an oilfield services company with substantial

experience in-country that supplies technology, project management and information

to the oil and gas industry. (Schlumberger operates in 80 countries worldwide. In 2006

the company reported USD$19.23 billion in operating revenue).

Halliburton de México: A subsidiary of Halliburton, one of the world's largest providers

of products and services to the petroleum and energy industries. The company

specializes in works related with exploration, drilling and development, fluid systems

and production optimization. (Halliburton operates in 70 countries worldwide. In 2006

the company reported USD$12.9 billion in revenue).

Main Service Companies Operating with PEMEX:

During the first four months of 2007 PEMEX tendered 127 contracts related with

services to the industry, governed under the Public Works law. This contracts

represent investments of MX$ 46,765 million pesos.

Unlike almost every other country involved in hydrocarbons development that has a

large domestic market, foreign companies dominate most of the Mexican Oil and Gas

service industry.

Weatherford International: One of the world’s largest diversified upstream oilfield

service companies. In 2006, the company reported USD $6.1 billion in revenue.

Weatherford International has approximately 30,100 employees working in over 100

countries.

http://www.slb.com/index.asp?

http://upload.wikimedia.org/wikipedia/en/f/ff/Halliburton_logo.png

141


COMESA (Compañía Mexicana de Exploraciones, S.A. de C.V.): The Company was

established in 1968 as a combination of government and private investment (PEMEX

60% and Schlumberger (defined as the technology partner) 40%). The goal was to

assist PEMEX in their exploration efforts. COMESA is a significant player in the

provision of 2D, 3D, 4D seismic studies for PEMEX. The company enjoys preferential

treatment in garnering these works for PEMEX.

In addition to COMESA’s executives, its board includes Mexico’s Secretary of Energy,

Secretary of Finance and Secretary of Public Function.

D&S Petroleum: A subsidiary of Grupo Diavaz, a local Mexican company with more

than 30 years of experience providing technical and engineering services. D&S

Petroleum in a consortium with Petrobras (Brazil) and Teikoku (Japan) called PTD

Servicios Multiples was awarded and operates two MSCs in the Burgos Basin:

Cuervito and Fronterizo.

Baker Hughes: The company provides oil and natural gas industry products and

services for drilling, formation evaluation, completion and production. (Baker

Hughes operates in over 90 countries worldwide. In 2006 the company reported

USD$ 1.36 billion in operating profit).

http://www.bakerhughesdirect.com/cgi/bhi/myHomePage/myHomePage.jsp?BV_SessionID=@@@@0251811892.1182182756@@@@&BV_EngineID=ccckaddlfeffjghcefecfefdfmldhfl.0

142


The interest of domestic service companies in Mexico is to

increase or at least maintain their current power position in the

industry. As such, if reforms are not accompanied by clauses

that involve higher national content and incentives to develop

a national service industry, they could oppose reform.

Swecomex: A subsidiary of Grupo Carso’s Infrastructure and Construction

Division, Swecomex serves the oil, chemical and petrochemical sectors.

Industrial Perforadora de Campeche (IPC): A Mexican owned company and a subsidiary of

Grupo R, IPC is dedicated to developing gas production and transport projects. IPC, through a

consortium with Tecpetrol and Techint, was awarded the MSC Monclova block in Burgos. IPC

also won the Pandura – Anahuac Block in Burgos through a consortium with Compañía de

Desarrollo Petrolero.

143


Public Works Contracts Awarded by PEP

June 12, 2003 – March 31, 2007

COMPANY # CONTRACTSAMOUNT

(US$ Million)

Dowell Schlumberger

Halliburton de México

Industrial Perforadora de Campeche

Swecomex

Constructora Subacuatica Diavaz

Baker Hughes de México

Weatherford de México

COMESA

56

62

2

9

11

16

8

3

2,650.86

1,932.40

964.10

873.91

562.42

255.71

74.56

55.70

Source: IPD Latin America based on PEMEX.

Note: The totals were calculated using an average exchange rate of 11.0049 based on Banco de México data.

144


145


Carlos Slim Helú Carlos Slim is the richest man in the world according to Forbes. He

runs Mexico's largest cellular phone company, América Movil and

has the virtual monopoly on landlines through Telmex. He is also

owner of Grupo Carso, one of the most important business

conglomerates in Latin America, which includes the following

companies:

Industrial Branch:

• Condumex

• Porcelanite

• Cigatam

Commercial Branch:

• Grupo Sanborns

• Mixup

• Sears

Infrastructure and Construction (CICSA):

• Swecomex

• Grupo PC Constructores

• Cilsa

• Precitubo

Slim has shown growing interest in Mexico’s energy sector and particularly in

PEMEX. Since 2003 Swecomex, one of its companies, has been involved in the

installation of deep sea platforms in the Campeche Sound and has built 10 out of the

45 platforms acquired by PEMEX over the last 3 years. Slim has also been actively

lobbying government and PEMEX officials and has stated that the needs of PEMEX

can be addressed without opening the sector to foreign participation.

http://en.wikipedia.org/wiki/Image:Carlos_Slim_moustache.jpg

146


Monterrey is home of important business conglomerates such as: CEMEX (Cement),

FEMSA (Coca-Cola Latin America), Alfa (petrochemicals, food, telecommunications and

auto parts), Axtel (telecommunications), Vitro (glass), Gruma (food), and Banorte (financial

services) among others.

Some of the most important and influential businessmen and families in the country either

reside or were born in the state, including:

Monterrey Businessman Leaders

• Garza Sada, (Grupo FEMSA, Vitro and Grupo Alfa)

• Zambrano (CEMEX)

• Muguerza (Grupo Muguerza – related with Healthcare)

The Monterrey industrial base has been extremely outspoken about the necessity of

having lower energy prices in the country. This does not necessarily mean that they

will support energy reform, because their main interest is lower prices not

competitiveness of the sector. During President Fox’s tenure, this became evidently

clear, as the federal government bowed to Monterrey pressure regarding natural gas

prices and provided healthy subsidies. Given the Monterrey Industrial base’s close

affinity with the PAN, Calderon will have his work cut out to eliminate subsidies as he

has discussed while still preserving this source of support.

We do not see the most important families entice by new business opportunities in

the oil and gas sector with any opening. Supporters are likely slightly smaller

businesses/ families.

147

Francisco Salazar Diez de Sollano - CRE President

As president of the Energy Commission of the Lower

House, Mr. Salazar flourished with a dynamic personality

and strong political skills that earned him the respect of

many. He successfully negotiated - gaining multi-party

support - for important initiatives, such as the 2006

PEMEX Fiscal Regime. Will remain a key political actor

with a strong interest in energy.

BACKGROUND

BSc in Chemical Engineering from the Universidad Autónoma de San Luis

Potosi

MSc in Public Financial Policy from the London School of Economics and

Political Science

OTHER POSITIONS

Profile:

2003 – 2005: Chairman of the Energy Commission in the Lower House.


Businessman in the LPQ Group, a partnership company oriented to

the import and distribution of chemical products.

Level of Interest

Po

we

r

-

Manage

closely

Reactive Active

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

148

Adrián Lajous is an economist from UNAM and Cambridge University. He is

a former PEMEX General Director (1994 – 1999), having joined the state

company in 1983. He held a series of key executive positions, including:

Lajous is now chairman of the Oxford Institute for Energy Studies, president of Petrométrica,

SC and a non-executive director of Schlumberger, Ternium and Trinity Industries. He is a senior

energy advisor to McKinsey & Company.

Executive Coordinator for International Trade

Corporate Director of Planning

Corporate Director for Operations

Director for Refining and Marketing.

In 2003–2004, he was a senior fellow at the Harvard University Kennedy School of Government

and a visiting fellow at the University of Notre Dame Kellogg Institute during the first quarter of

2005.

Viewed as a respected and experienced professional in Mexico's hydrocarbons

industry, Lajous has re-emerged over the past couple of years to play a relevant role

in the sector. He is not in favor of reforms in the sector and uses every opportunity

he has to state that PEMEX would not be facing the problems it is currently

experiencing if the company would simply have access to a greater portion of the

economic profits it generates.

Adrian Lajous


149149

Potential Strategies to Pursue

3:45 pm – 5:00 pm

150150

Opportunities that May Emerge from

Energy Reform

151

Defining Energy Reform - What are the Alternatives?

Constitutional Reform

Path

Secondary Laws Reform Path

“Super” Service Contracts.

(You do not get JV’s or risk

capital; interests remain

misaligned)

NO. These are meaningful

changes with economic

impact but they are not

comprehensive.

Buys government time.

NO. Highly likely to be

contested in Supreme

Court. Will stretch legal

framework and spirit of

Constitutional Art. 27 & 28

Broad-based downstream

investment & competition

Redefine “strategic”

& “priority”

activities of the

state (Art. 28)

Overhaul Articles 27

& 28 of the

Constitution

Full downstream opening

(NG & petrochemicals)

Strengthening CRE

Implementation of FHS

Increased competition in

gas supply

Spurs investments in

petrochemical and

refining sectors

Adjustment to

remuneration and/or

performance clauses

Adjustments to Public

Works and Acquisition

Laws

YES

Broad-based upstream

investment and

competition

Is this enough?

What do you get?

152

• Modify the Foreign Investment Law

• Changes to Regulatory Law of Article 27

• Reform to the contracting laws*

• Fiscal and tax reform

• Strenghten the regulator

152

Opportunities – Path of Least Resistance

• Implement FHS

• Modify natural gas pricing policy (Hacienda)

• Increase Pemex/ CFE budget for natural gas projects

No Constitutional

or legal changes

(no congressional

involvement required)

* Service and Acquisitions Law and Public Works Law

Changes to Secondary

Laws

(simple majority in

Congress required)

Constitutional Reform

(super majority in Congress plus

half of the local legislatures)

Reform of

Constitutional

Articles 27 & 28 Opportunities from making

changes to the natural gas

business model:Pipelines

LDCs

LNG

Third-party marketing

Power plants

Refining

Petrochemicals

153153

Future projects and priorities for CFE & PEMEX

154154

Objective: Ensure the continuous supply of electricity at the cheapest costpossible.

Under this premise, CFE has expanded its mandate, and has gained moreground regarding the contractual conditions for the fuels the state-ownedutility uses to generate electricity.

Diversification of the fuel mix is a CFE priority but it has limited options

New projects and priorities - CFE

Natural Gas34%

Coal10%

Fuel Oil28%

Wind0%

Diesel0%

Hydro23%

Nuclear3%

Geothermal2%

2005

Undesignated9%

Natural Gas44%

Coal9%

Fuel Oil11%

Wind1%

Diesel3%

Hydro21%

Nuclear2% Geothermal

2%

2016

Source: CFE; POISE 2007-2016

155155

Over the next decade, CFE expects to add over 539 MW in wind power.

At present, CFE is bidding the 101 MW La Venta III wind power under its IPP scheme. But there are certain interesting features worth noting:

Access to the grid: 100% CFE guarantee, based on the lowest short-term marginal cost (based on its fuel supply and associated infrastructure)

Payment: Payment will be based on the actual electricity delivered to the grid, instead of the installed capacity as happens in typical IPPs.

International Support: Environmentally-friendly projects have found momentum in the international arena, securing attractive financing from developers and operators La Venta III will receive a GEF subsidy for the first 5 years of the project.

Innovative legislation: CFE has created pioneering features to guarantee land and air Rights of Way (ROWs).

Results of La Venta III are likely to influence how CFE will carry out future wind projects.

Solar power has thus far only been a component add-on to larger projects (Agua Prieta II).

Renewable Energy

156156

…..However, for planning purposes, CFE will continue to rely heavily on fossil fuel projects.

BIG WINNER: Natural Gas

In order to secure more competitive bids, CFE has become the fuel supplier to IPPs.

This has eliminated mismatches between the PPA and fuel supply contract.


-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Te

raJ

ou

les

/ D

ay

CFE Fossil Energy Requirements (by fuel)

Coal

Diesel

Natural Gas

Fuel Oil

Source: CFE; POISE 2007-2016

157157


Power Plants

Transmission Lines Substations

LNG

Natural Gas - Pipelines

Coal imports

158158

Generation


Project Location Fuel Scheme Capacity

(MW)

Start-up

Topolobampo I-II-III * Sinaloa, Pacific Coast Coal OPF 2,100 2014 – 2016

Conversions from fuel oil

to natural gasCentral Mexico Natural gas OPF 2,248 2009 – 2013

La Parota Guerrero, Pacific Coast Hydro OPF 900 2015

La Yesca Nayarit, Pacific Coast Hydro OPF 750 2012

Guadalajara I – II Jalisco, Western Mexico Natural gas IPP 1,290 2013 – 2014

Oaxaca I-II-III-IV Oaxaca, Southern Mexico Wind IPP – OPF 404 2010

Manzanillo I upgrade Manzanillo, Pacific Coast Natural gas OPF 916 2011-2012

Manzanillo II upgrade Manzanillo, Pacific Coast Natural gas OPF 816 2013-2014

Norte II Chihuahua, Northern Mexico Natural gas IPP 652 2011

Source: CFE; POISE 2007-2016 and National Infrastructure Plan 2007-2012

159159

Generation


Project Location Fuel Scheme Capacity

(MW)

Start-up

Cogeneration plant in

the Nuevo Pemex Gas

Processing Center

Tabasco, Southern MexicoSteam /

Residual fuelOPF (?) 300 2010

Rio Moctezuma Central Mexico Hydro OPF 139 2013

Baja California

(Presidente Juarez)

Baja California, Northern

MexicoNatural gas IPP (?) 259 2009

San Lorenzo conversion Puebla, Central Mexico Natural gas OPF 139 2009

Cerro Prieto VBaja California, Northern

MexicoGeothermal OPF 107 2010

Presidente JuarezBaja California, Northern

MexicoNatural gas OPF 93 2010

Humeros Puebla, Central Mexico Geothermal OPF 51 2010 – 2011


160160

Natural Gas


Type Project LocationCapacity

(MMCFD)Start-up

Natural Gas

(LNG)

Supply for CFE‟s Manzanillo power plants

as well as new IPPs in Guadalajara and

Central Mexico.

Manzanillo,

Pacific Coast

Up to 500

MMCFDJuly 2011

Natural Gas

(LNG or pipeline)

Supply for CFE‟s power plants in

Chihuahua, Durango and TorreonNorthern Mexico

Up to 750

MMCFDUndefined*

Transportation Manzanillo – Guadalajara pipeline Western Mexico 500 MMCFD 2011-2012

Transportation Tamazunchale – Palmillas pipeline Central Mexico 480 MMCFD 2012

TransportationSamalayuca-Chihuahua & Chihuahua-

Torreon pipelinesNorthern Mexico 480 MMCFD Undefined*

Storage

(LNG)

LNG Terminal and associated

infrastructure in Topolobampo

Sinaloa, Pacific

Coast

Up to 750

MMCFDUndefined*

Storage

(depleted well)

Tidelands, through a Mexican subsidiary,

has approached CFE to make use of a

depleted well in Northern Mexico

Tamaulipas,

Northern Mexico55 BCF Undefined*


161161

Exploration & Production

Manage the decline of the massive Cantarell field

Implementation of horizontal wells

Increase use of N2 to maintain pressure

Major workovers to be performed

Shutdown of selected wells

Increase production from Ku-Maloob-Zaap (KMZ) and Crudo LigeroMarino (CLM)

Maximize use of the FPSO in KMZ

Add 15 platforms in KMZ (10 exploitation wells)

CLM will add new reserves of lighter oils, as well as enhancing the qualityof the Mexican crude oil basket

CLM is estimated to provide up to 700 MMCFD by 2009-2010

Increase gas production from Burgos and Veracruz

Maintain production from Burgos (PEP operations and MSCs)

Add new reserves and production coming from the non-associated gasfields in Veracruz

Development of Chicontepec reserves

New projects and priorities - PEMEX

162162

Natural Gas

Objectives:

1. Retain monopolistic position in the natural gas industry, via its control of the National Pipeline System (NPS) and the cross-border interconnection points.

2. Increase the availability of dry gas in the NPS.

As a result, PGPB is focused on increasing its capacity in all of its gas processing centers.

The majority of PGPB investment will be focused on adding new cryogenic units in its gas processing centers.


-in MMCFDProcessing Capacity

2006

Expected Processing Capacity

2012Variation

Sweeting capacity 4,547 5,502 21%

Liquids recovery 5,598 6,885 23%

Liquids fractioning

(thousands b/d)486 549 13%

Sulfur recovery (tons) 3,368 3,839 14%

163163

For 2007, PGPB received MXP$ 7,714 million, none of which will be invested innew projects and only 4.2% to be invested in existing project completions orexpansions.

As owner of the NPS, and due to weak regulation, PGPB seeks to strengthen itsdominant position in natural gas marketing and transportation.

PGPB investment in pipelines will continue to be made through additionalcompression.


4,000

4,500

5,000

5,500

6,000

6,500

7,000

2006 2007 2008 2009 2010 2011 2012

MM

CF

D

National Pipeline System Capacity

Emiliano

Zapata

Chavez-

Durango

Santa Ana

Omealca, El Dorado

El Sueco II

Chavez-Chihuahua

Santa Catarina II

Macarela

Natural Gas

164164

Natural Gas

Given the growing demand in certain regions, PGPB feels it important toadd the following transportation projects:

1. Durango – Topolobampo

2. Torreon – Topolobampo

3. Torreon – San Luis Potosi

4. Zacatecas – Durango

5. Juarez – Torreon

6. Manzanillo – Guadalajara (CFE-sponsored project)

7. Tamazunchale – Palmillas (CFE-sponsored project)

8. Piedras Negras – Reynosa (interconnection)

No indication of the scheme that is being contemplated to implement theseprojects at this time.

Given the historically insufficient resources that have been available to it,PGPB has entered into joint venture with private companies (i.e. Gasoductosde Tamaulipas & Gasoductos de Chihuahua with El Paso)


165165

Natural Gas – Natural Gas Infrastructure

ARTEAGA

TAMPICO

MONTERREY

SALTILLO

ARIZPE

TorreónCd . Lerdo

LAREDO

MATAMOROS

IMPORTS

Sn.

CadereytaParras

Sn.

C.F.E. Colinas

Topolobampo

TOLUCA

MEXICALI

GUAYMAS

CELAYA

LEON

IRAPUATO

SALAMANCA

RAMOS

PIEDRAS

NEGRAS

SILAO

AGUASCALIENTES

EMPALME

CUAUHTEMOC

ANAHUAC

Gómez P.

CD. JUAREZ

ALTAMIRA

CD. MADERO

TLAX.

NUEVO

RIO

BRAVO

PACHUCA

REYNOSA

PUEBLA

DF

MERIDA

IMPORTS

IMPORTS

CananeaSanta

Ana

HERMOSILLOCHIHUAHUA

Delicias

Cd.

Camargo

JiménezcQuímica

del Rey

Luis Potosí

Guadalajara

Tula

Poza

Rica

Nvo. Teapa

Atasta

Sta.

Ana

Tlalchinol

Cactus y

Nuevo PemexL. Cárdenas

Escalón

Castaños

Pandura

Miguel

Alemán

Fernando

Campo Tam .

C.F.E. El Verde

Nogales

ValladolidCAN CUN

IMPORTS

Naco

Altamira

Energia

Costa

Azul

Pto. Libertad

Manzanillo

Geographic Zones



Potential Storage


LNG Proposed Site

LNG In Operation

Potential Pipelines (private)

Durango.1

2

6

5

4

3

8

7

1. Durango – Topolobampo

2. Torreon – Topolobampo

3. Torreon – San Luis Potosi

4. Zacatecas – Durango

5. Juarez – Torreon

6. Manzanillo – Guadalajara (CFE-sponsored project)

7. Tamazunchale – Palmillas (CFE-sponsored project)

8. Piedras Negras – Reynosa (interconnection)

166166

Other Opportunities

167167

Due to the lack of certainty about domestic supply, as well as itsenvironmental benefits, LNG is becoming the Mexican fuel of choice.

Other areas of opportunity - LNG

There are, however, some issues that still need to be resolved:

State-owned utilities continue to be the main anchor client to secure supply. Untilsome of Mexico‟s contracting laws are changed, rigidity in the commercialrelationships required with state-owned utilities will continue to be present.

Due to PGPB‟s monopolistic position, there is limited ability to sell excess gas. PGPB can accept /reject excess gas at its own discretion and on its terms.

As a consequence, the Mexican off-take market is substantially less attractive topotential suppliers, particularly given offtake dynamics being seen in Asia.

Asia is willing to pay a premium for LNG. Mexican non-government natural gasusers are likely to continue seeking some form of government intervention toinfluence price and commercial conditions as long as energy monopolies areretained.

168168

In the worst case scenario, PEMEX fails to add natural gas reserves and production in the near future, forcing the country

to become a major LNG importer (1.8 BCFD by 2015)


168

ARTEAGA

TAMPICO

MONTERREY

SALTILLO

ARIZPE

TorreónCd . Lerdo

LAREDO

MATAMOROS

IMPORTS

Sn.

CadereytaParras

Sn.

C.F.E. Colinas

TOLUCA

MEXICALI

GUAYMAS

CELAYA

LEON

IRAPUATO

SALAMANCA

RAMOS

PIEDRAS

NEGRAS

SILAO

AGUASCALIENTES

EMPALME

CUAUHTEMOC

ANAHUAC

Gómez P.

CD. JUAREZ

ALTAMIRA

CD. MADERO

TLAX.

NUEVO

RIO

BRAVO

PACHUCA

REYNOSA

PUEBLA

DF

MERIDA

IMPORTS

IMPORTS

CananeaSanta

Ana

HERMOSILLOCHIHUAHUA

Delicias

Cd.

Camargo

JiménezcQuímica

del Rey

Luis Potosí

Guadalajara

Tula

Poza

Rica

Nvo. Teapa

Atasta

Sta.

Ana

Tlalchinol

Cactus y

Nuevo PemexL. Cárdenas

Escalón

Castaños

Pandura

Miguel

Alemán

Fernando

Campo Tam .

C.F.E. El Verde

Nogales

ValladolidCAN CUN

IMPORTS

Naco

Altamira

Energia

Costa

Azul

Manzanillo


LNG Proposed Site – PEMEX sponsored project

LNG In Operation

Geographic Zones



Durango.

Dos Bocas

Salina Cruz

Location of PEMEX-driven LNG terminals would be dictatedby its infrastructure in place and internal gas demands

169169


The story definitely changes if PEMEX successfully taps its known reserves andefficiently ramps up domestic natural gas production.

PEMEX does it alone – NO JVs PEMEX does it with partners – JVs

Pipeline imports would be reduced

Production could allow Mexico to be a

net exporter (via pipeline)

New pipeline projects arise.

Current LNG deals are likely to be

honored, due to:

Expensive termination costs

Reputation

Strategic regional position

Pipeline imports would be eliminated.

Extra production and investment would

allow Mexico to become a net exporter

(via pipeline or LNG)

New pipeline projects arise, both for the

Mexican market as well as cross-border.

Current LNG deals could potentially be

broken/modified:

Trade-off with JV‟s to compensate

termination costs.

Opportunity cost covered

Regional leadership

170170

LDCs

Future LDC‟s: CRE expects to bid out the following LDCs by 2008-2009 if there isenough interest:

Veracruz (2nd bid)

Pachuca (Central Mexico)

Cuernavaca (Central Mexico)

Merida (Yucatan Peninsula)

Others:

Underground storage (depleted wells or salt domes): Due to price and supply volatility,a supplier could offer better terms to natural gas consumers (CFE, industrials,PEMEX, etc).

Hedging services to CFE / IPPs

Environmental: Given that Mexico is designated as a Kyoto Protocol Tier 2 country,there are numerous projects emerging that represent real opportunities.

Other areas of opportunity

171171

Natural Gas –New Projects Contemplated

Open Access Transport:

(1) Manzanillo

(2) Tamazunchale

(3) Chihuahua

LNG Terminals

New Distribution Zones

MORELIA

ENSENADA

TORREON

LERDO

HERMOSILLO

EMPALMEGUAYMAS

GOMEZ PALACIO

TAMPICO

CD. MADERO

QUERETARO

SN. JUANDEL RIO

CELAYA

TOLUCADF

LEON

IRAPUATOSALAMANCA

CHIHUAHUA

CUAUHTEMOCDELICIAS

TLAXCALA

PUEBLA

MONTERREY

NUEVOLAREDO

SALTILLO

RAMOSARIZPE

ARTEAGA

PIEDRAS

NEGRAS

JUAREZ

REYNOSA

RIO

CUERNAVACA

PACHUCA

SN. LUISPOTOSI

SILAO

AGUASCALIENTES

DURANGO

ZACATECAS

GUADALAJARA VERACRUZ

Merida

PACHUCA

CUERNAVACAManzanillo

Tamazunchale

Chihuahua

(3)

(1)

(2)

Source: CRE

Altamira

Las Palmillas

172

1. Section 1

2. Section 2

3. Section 3

Support Slides

173

Section 1

174

Secretary of Finance - SHCP

The Secretary of Finance plays an important role in the

energy sector and participates in the following activities:

1. With SENER’s input, SHCP has the final say over the annual budgetary process for PEMEX,

CFE and LFC.

2. SHCP sits on the administrative boards of the state owned utilities.

3. SHCP oversees the implementation of all projects and activities approved by Lower House.

4. SHCP monitors and evaluates the economic results of the sector via public accounting

reports called the “Informes de la Cuenta Publica”.

SHCP is also responsible for (de facto responsibilities):

1. Creating general guidelines for the operation of PEMEX, CFE and LFC and supervising

compliance with these guidelines.

2. Creating the debt policy of the sector and authorizing any foreign financing.

3. Authorizing all the operations that require the use of public credit.

4. Establishing and reviewing tariffs (diesel, gasoline and residential electricity).

175

Secretary of Finance - SHCP

PERCEIVED GOALS

Maintain its control of the sector’s purse strings and its sphere of influence

Maintain overall economic stability and macroeconomic indicators

Increase tax collection

Promote an integral fiscal reform

RESOURCES

In 2007, SHCP had 6,226 employees

In 2007, SHCP was authorized federal resources of MX$ 3,822,268,035

Budget Resources/Employee: MX$ 613,920

176

Secretary of Energy - SENER

BACKGROUND

OBJECTIVES

Ensure consistency of the national energy policy

Undertake medium & long term planning efforts in order to guide the development of the sector

Supervise the activities of PEMEX, CFE and LFC

Ensure energy supply and optimization use of country’s hydrocarbon reserves

Promote a regulatory and legal framework that provides certainty to public & private investment

RESOURCES

In 2007, SENER had 858 employees

In 2007, SENER was authorized federal resources of MX$ 520.78 million

Budget Resources/Employee : MX$ 606,969

PERCEIVED GOALS

Sustain a healthy and viable energy sector

Given current dynamics, promote a sector restructuring (includes tax reform)

Increase efficiency of the energy sector via public or private sector investment

Obtain greater oversight of PEMEX

Promote energy diversification

The Secretary of Energy is in charge of leading the national energy

policy, as well and the activities undertaken by PEMEX, CFE and LFC.

177

PEMEX

PEP (Pemex

Exploration and

Production)

PGPB (Pemex

Gas and Basic

Petrochemicals)

PR (Pemex

Refining)

PPQ (Pemex

Petrochemicals)

Exclusively responsible

for all exploration and

production of Mexico‟s

hydrocarbons

1) Exclusively responsible

for processing all domestic

natural gas and liquids

2) Transports, distributes

and markets basic

petrochemicals*

1) Exclusively

responsible for converting

oil into gasoline, jet fuel,

diesel, fuel oil and LPG

2) Distributes and

markets these products

1) Manufactures and

markets secondary

petrochemicals

(private sector able

to fully participate in

this sector)

* Methane, ethane, propane, butane, condensates and other natural gas liquids

RESOURCES

As of Dec 31, 2006 PEMEX had

approximately 148,200 employees (80%

are unionized

In 2007, PEMEX was authorized federal

resources of MX$ 182,298 million

Budget Resources/Employee :

MX$ 1,230,083

PERCEIVED GOALS

Retain monopoly

Retain greater portion of its earnings (larger

CAPEX or decreased tax burden)

Management and operational autonomy

Liberalize contracting laws (public works law,

acquisitions law)

Gain technology, know-how and risk capital to

access increasingly complicated production

178

IMP – Mexican Petroleum Institute

BACKGROUND

The IMP was created in 1965 to be Mexico’s hydrocarbon R&D arm.

However, due to insufficient funding it has functioned more as an

academic and privileged early retirement destination for senior

technical PEMEX staff. Today, the IMP serves more as a human

resources group than an R&D one.OBJECTIVE

Hydrocarbon research, technology development and technical assistance including

personnel deployment to PEMEX

RESOURCES

In 2006 the IMP had 6,700 employees

In 2007, the IMP was authorized federal resources of MX$ 358,900,000


PERCEIVED GOALS

Develop a comprehensive deepwater program

Strengthen role (increased funding and say over PEMEX R&D decisions)

Be or play a prominent role with respect to the creation of a hydrocarbons regulator

179

CRE - Energy Regulatory Commission

BACKGROUND

Created in 1995 as a result of the natural gas reforms enacted that same year.

The CRE is a decentralized administrative agency of the Energy Ministry, with technical and operational autonomy. OBJECTIVE

Regulating the natural gas and electric industries. Activities include:

RESOURCES

In 2007, the CRE had 131 employees

In 2007, the CRE was authorized federal resources of MX$ 126,345,116


STRUCTURE PERCEIVED GOALS

Strengthen CRE in terms of economic

and personnel resources

Expand scope of oversight (includes

say in electricity tariff setting) and

gain enforcement powers (collect and

retain increased fees and penalties)

Become or play a prominent role in a

new “hydrocarbon” regulatory agency

There are five commissioners that

vote as a collective body on all

regulatory matters:

1. Francisco Salazar (President)

2. Adrian Roji

3. Noe Navarrete

4. Francisco Barnes de Castro

5. Israel Hurtado Acosta

First Hand Sales, evaluation and award of transportation, storage and distribution

permits; non-discriminatory open access and unbundling of services; import-export

permits for electricity and natural gas, power generation permits, etc.

180


Energy Savings Commission

CNSNS

Comisión Nacional de Seguridad

Nuclear y Salvaguardias

IIE -Mexican Electric

Research Institute -

ININ – National

Institute of Nuclear

Research -

INSTITUTIONAL GOAL: CONAE is responsible for promoting

energy savings and the use of renewable energies in Mexico.

CONAE is independent of SENER.

2007 Budgetary Resources: MX$ 57,288,919

Personnel: 95 employees

INSTITUTIONAL GOAL: Ensure security in nuclear related activities.



INSTITUTIONAL GOAL: Undertake research and technological

development projects for the electrical sector.


Personnel: 1,090 employees

INSTITUTIONAL GOAL: Undertake research and technological

development projects related to the nuclear energy industry.







181


INSTITUTIONAL GOAL: Generate, transmit and distribute

electrical power within Mexico. CFE provides electrical power

services to 24.2 million customers or nearly 80 million Mexicans.

2007 Budgetary Resources: MX$ 191,236,366,860


INSTITUTIONAL GOAL: Distributes electricity in Mexico City and

the surrounding Estado de Mexico, Hidalgo, Morelos and Puebla.

2007 Budgetary Resources: MX$ 27,972,600,000


Budget Resources/Employee: MX$ 2,391,381


182

Section 2

183183

Upstream Businesses Open to the Private Sector

Given legal restrictions governing the upstream sector, PEP has

turned to the private sector companies for the supply of oil services

and machinery.

Through service contracts, PEP is able to subcontract a variety of

work activities, including:

• Well location identification, seismic, drilling and geotechnics.

• Integral or turnkey projects where the contractor is responsible for everything

from the design of the project to its total completion. Technology transfer may

be included.

• Supply of all related oil sector infrastructure from marine pipelines to turbines

to platforms to rigs.

184184

Upstream Businesses Open to the Private Sector

The principal business lines that have been open to the private

sector to date include:

• Service Contracts

• Multiple Service Contracts (MSC)

• Alliance Contracts (in development)

• Enhanced recovery plants (nitrogen, water, CO2) and nitrogen

removal*

• Gas compression plant*

• Rigs and platforms

• Seismic

• Supply of all related oil industry technology and services

*Can be owned by the private sector; e.g. Cantarell Nitrogen

Injection and Campeche Gas Compression

185

FHS Regime - Pricing Hubs and Arbitration Point

Cd. Juárez

Relevant South Texas Index

(HSC or TETCO)

Cd. Pemex

Lazaro Cardenas

Guadalajara

Monterrey

Chihuahua

(–)

(+)

Reynosa

Los Ramones

MaderoLankahuasa

Burgos

Basin

Permanent FHS Regime

(Power Plants)

Transitional FHS Regime (Non-

electricity natural gas users)

PFHS = HSC – D + TF PFHS = TETCO

PCd. PEMEX = PFHS + TPR-A – TPCP-A PCd. PEMEX = PFHS + TPR-A – TPCP-A

186186

Natural Gas – LNG Projects

ALTAMIRA LNG TERMINAL

General Information:

• Owner: Shell (50%), Total (25%), Mitsui (25%)

• Location: Port of Altamira, Tamaulipas

• Size and Tenor: 500 MMCFD; 15 years

• Estimated Investment: US$ 370 Million

• Starts Operation: 2006

Supply:

• Potential sources: Nigeria, Qatar, Atlantic LNG in Trinidad, Venezuela, Angola, Egypt, and Norway.

• Shell has a 25.6% ownership stake in Nigeria LNG Ltd.; Total has 15%. Total has a 10% interest in

Qatar LNG; Mitsui has a 7.5% stake. Shell also has a 30% stake in Mariscal Sucre LNG (Venezuela).

Offtake:

• CFE expects to supply 3 IPP‟s: Altamira V, Tamazunchale and Tuxpan V (combined capacity 2,469

MW; combined consumption 425 MMCFD)

• Pricing: Henry Hub index plus a constant of US$ 0.179975/ MMBTU

Permits Received:

• CFE undertook the environmental impact assessment study and the corresponding risk analysis.

• CRE Permit: July 31, 2003

Outstanding Issues / Next Steps:

• Potential competition from pipeline imports. Also, influence of PGPB will likely be a market barrier to

industrial sales in nearby consumption centers

• Limited options for sourcing of LNG in the Atlantic Basin through 2008 or 2009

• Close to major northern Mexico gas production areas

187187

ENERGIA COSTA AZUL (ECA)


• Owner: Sempra (Terminal); Shell – 50% supply

and offtake rights

• Location: Ensenada, Baja California

• Size: 1 BCFD

• Tenor: 14.5 years (starting 2008)

• Estimated Investment: US$ 1.4 billion

Supply:

• Sempra: 20 year SPA with BP–led Tangguh LNG for 500 MMCFD or 3.7 MM tons/year of LNG

• Shell: 20 – year SPA with Sakhalin Energy for 37 million tons; 500 MMCFD (2008-2011) and 200

MMCFD thereafter, likely

Offtake:

• CFE awards its Baja Natural Gas Supply contract to Sempra on Jan. 11, 2005 (130 MMCFD avg.)

• Pricing: SoCal less $0.04/ MMBTU for Fixed Capacity

• Balance of supply (avg. of 370 MMCFD initially) to be moved into US market

Permits Received:

• CRE Permit: Aug. 7, 2003

• Environmental permit awarded: April 9, 2003

• Local land use permit awarded: August 12, 2003


• Potential expansion


188188

Manzanillo LNG – Supply contract


• Location: Cuyutlan Lagoon, in Manzanillo, Colima. Mexican Pacific coast.

• Size: up to 500 MMCFD

• Supply: Under bidding. Potential sources include Camisea LNG (Peru), Sahkalin (Russia), Gorgon

and Darwin (Australia), Tangguh (Indonesia), as well as South Par (Iran)

Offtake:

• Expected to Western and Central Mexico

• Anchor client will remain CFE for, at least, 15 years.

Permitting Status:

• Land use permit, granted by the State and municipal authorities, awarded in June 2005.

• CRE Permit: winner of the LNG terminal contract (500 MMCFD for 20 years) will be only permit

evaluated.

• SEMARNAT Permit: expected to be granted by mid-September 2007.


• Supply contract will receive bids on September 4, 2007.

• If supply contract is awarded, LNG Terminal will receive bids on January 3, 2008.

• Master Program, to be proposed by the Secretariat of Communications and Transportation (SCT), to

relocate existing railroad, telecommunications and water facilities has not be finalized.


189

Section 3

190

PEMEX Support Map - Focus on Decision makers and PEP

Jesús Reyes Heróles

Raúl

Livas

Sergio

Guaso

Esteban

Levín

Rosendo

Villareal

Ernesto

Ríos

Carlos

Morales Gil

Antonio

EscaleraTeódulo

Gutierrez A.

J. Hernández

San Juan

Javier

Hinojosa

Puebla

Pedro

Silva

López

Vinicio

Suro

Roberto

Ortega

Lomelín


Jorge

Serrano

Lozano

Jorge

Fernandez

Venegas

191


Raúl

Livas

Sergio

Guaso

Esteban

Levín

Rosendo

Villareal

Ernesto

Ríos

Carlos

Morales Gil

Antonio

EscaleraTeódulo

Gutierrez A.

J. Hernández

San Juan

Javier

Hinojosa

Puebla

Pedro

Silva

López

Vinicio

Suro

Roberto

Ortega

Lomelín

Jorge

Serrano

Lozano

Jorge

Fernandez

Venegas

PEMEX Conflict Map - Focus on Decision Makers and PEP


Romero

Deschamps

192

Support Profiles

1. Presidency

2. Secretary of Finance

3. SENER

4. PEMEX

5. Unions

6. Congress

PEMEX Corporate

PEMEX Career Engineers

PEMEX PEP

PEMEX PGPB

Lower House Commissions:

Presidency

Energy

Budget

Finance

Constitutional Affairs

Senate Commissions :

Presidency

Energy

Finance

Constitutional Affairs

5. CFE

193

Presidency

194

Felipe Calderon – President of Mexico

BACKGROUND


Masters degree in Economics from ITAM and a Masters degree in

Public Administration from Harvard’s School of Government

OTHER POSITIONS

Dec 2006 – Dec 2012: President of Mexico

2005: PAN presidential candidate

Sep 2003 - May 2004: Secretary of Energy

Feb 2003 – Sep 2003: Director of the National Bank of Public Works and Services (Banobras)

2000-2003: Lower House Deputy, PAN Leader in the Lower House and President of the Lower

House Political Coordination Counsel

1996 – 1999: PAN Party President

1993: Secretary General of the PAN


1986: President of the PAN’s youth movement

P PM T PB

Profile:

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

President Calderon has constructed his economic platform

based on a market oriented view, where strong institutions

and rule of law will play a significant role. During the first

months of his administration, he has centralized power,

attacked organized crime, addressed social issues and

negotiated pension reform. He appears to have a clear

reform agenda he wants to pursue.

SUPPORTERS

Business community

Financial sector

PAN (recent consolidation)

195

Mr. Mouriño is perceived to be the most relevant political

operator in the Calderon Administration. He is extremely close

to the President and is going to play a major role in any decision

making in the administration, including defining the extent of

reforms that will be pursued.

Juan Camilo Mouriño – President’s Chief of Staff

BACKGROUND

Degree in Economics from the University of Tampa, Florida

Masters degree in Accounting from La Universidad Autónoma de Campeche

OTHER POSITIONS

P PM T PB

Profile:

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Dec 2006 – to date: President Calderon’s Chief of Staff

2005: Coordinator of Felipe Calderon’s transition team

2004: Undersecretary of Electricity in SENER, when Felipe Calderon was

head of the ministry

2000 - 2003 : Federal Deputy and president of the Lower House Energy

Commission (not entire term)

2000: Coordinator of Fox’s presidential campaign in the Yucatan peninsula,

achieving important gains for the party

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS

Felipe Calderon

Regional support in Yucatan

Reactive Active

196

Cesar Nava – President Calderon Private Secretary

Despite the fact that Cesar Nava is one of the closest

collaborators of Calderon, we do not see him playing a

very visible role in terms of hydrocarbons reform. His

position now is more political and administrative than

centered on defining policies such as energy.

BACKGROUND

Law degree from Univeridad Panamericana

Masters in law from Harvard University

OTHER POSITIONS

P PM T PB

Profile:

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Dec 2006 – to date: Private Secretary of President Calderon

2005: Deputy Secretary General of the PAN (Secretario General Adjunto)

and Calderon spokesman during presidential campaign

2004 - 2005: PEMEX’s Chief Counsel and SENER’s General Director of

Legal Affairs

2000-2003: Lower House Deputy; coordinated PAN legislative procedures

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS

Felipe Calderon

PAN traditional wingReactive Active

197

Dionisio Perez-Jácome –Chief of Advisors

BACKGROUND


Masters in International Management (Dirección Internacional) from ITAM

and a Masters in Public Policy from John F. Kennedy School, Harvard

University

OTHER POSITIONS

Dec 2006 – to date: President Calderon’s Chief of Advisors

2005: Director and partner of Mercer Management Consulting; left to

join Calderon’s campaign (economic and public policy team)

2000 - 2005: President of the Energy Regulatory Commission (CRE)

1998 - 2000: Chief of Investment Promotion Unit in SENER

Perez-Jácome works directly with Juan Camilo

Mouriño and as part of the administrative team of

Calderon. Given his background, we expect him to

have a say in energy reform discussions.

P PM T PB

Profile:

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS

Felipe Calderón

Juan Camilo Mouriño

Luis Téllez Reactive Active

198

Margarita Zavala – President Calderon’s Wife

BACKGROUND


Program in Women’s Political Studies at Harvard University

OTHER POSITIONS

2003 - 2006: Federal Lower House Deputy for the PAN

1999 – 2003: Secretary for Women’s Political Participation in the PAN

1994-1997: Mexico City (Federal District) legislator

Ms. Zavala is a career politician who has focused her efforts on women’s rights and

gender equality. Married to Felipe Calderon since 1993, they have three children

together. She is considered to be a conservative catholic. In contrast to her

predecessor Martha Sagun, Ms. Zavala will not play a highly visible public role during

Calderon’s administration. Her influence will be more behind the scenes. Given her

areas of interest, we do not see her playing much of a role in hydrocarbons reform.

P PM T PB

Profile:

P= Politician


T: Technical Energy

Expert

PB: Pro-Business Reactive ActiveLevel of Interest

Po

we

r

-

Manage

closely

199

Secretary of Finance

200

Carstens’ appointment as Secretary of Finance has been viewed

as very positive by both national and international markets. He is

widely expected to continue Mexico’s adherence to the disciplined

fiscal and monetary policies seen over the past decade.

Broadening and better enforcement of tax collection will be

Carstens’ biggest challenge in his new post.

Agustín Carstens – Secretary of Finance

BACKGROUND

Degree in Economics from ITAM (Instituto Tecnológico Autónomo de

México)


OTHER POSITIONS

P PM T PB

Profile:

Dec 2006 – to date: Secretary of Finance

2003 - Oct 2006 : Deputy Managing Director of the International Monetary

Fund (IMF)

2000-2003: Undersecretary of Finance and Public Credit

1999 - 2000: Executive Director at the IMF (representing Costa Rica, El

Salvador, Guatemala, Honduras, Mexico, Nicaragua, Spain and Venezuela)

Before first stint at the IMF, Carstens worked at Banco de México

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS

Felipe Calderon

Francisco Gil

Financial markets

Reactive Active

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

201

Dr. Werner has extensive experience in the Mexican economy and

as undersecretary of finance he will play an important role in any

energy reform discussions. He is super pragmatic. During his

previous position as head of Economic Planning Office in SHCP

he was directly involved in the budgetary approval process of

PEMEX.

Alejandro Werner – Undersecretary of Finance

BACKGROUND


PhD in Economics from the Massachusetts Institute of Technology

OTHER POSITIONS

P PM T PB

Profile:

Dec 2006 – to date: Undersecretary of Finance

2003 – 2006: He worked in SHCP as head of the Economic Planning Office

1999 - 2003: Director of Economic Studies at Banco de Mexico

1996: He began working at Banco de Mexico

1995 – 1996: He worked at the International Monetary Fund

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS

Felipe Calderon

Agustin Carstens

Francisco Gil Diaz

Georgina Kessel

Reactive Active

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

202

Mr. Sanchez Ugarte has extensive experience in the Mexican

economy. As Undersecretary of Federal Income, he will play an

important role in any energy reform discussions. As former

president of the Federal Competition Commission, Mr. Sanchez

Ugarte sat on the boards of PEMEX and CFE. Although he is not a

specialist in energy matters, he does have a broad understanding of

the sector.

Fernando Sanchez Ugarte - Undersecretary of Federal Income

BACKGROUND



OTHER POSITIONS

P PM T PB

Profile:

Dec 2006 – to date: Undersecretary of Federal Income

2000 – 2005: President of the Federal Competition Commission

1988 – 1994: He worked at the Ministry of Trade and Industry Promotion

(now Ministry of Economy). In 1994, he was appointed Undersecretary of

Industry

1983 – 1988: General director of Income Policy in SHCP

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS

Felipe Calderon

Agustin Carstens

Francisco Gil Diaz

Georgina Kessel Reactive Active

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

203

Ernesto Cordero is one of Calderon’s closest

collaborators and Calderon’s insider in SHCP. He

worked as Calderon’s top economic advisor during the

presidential campaign. Cordero spearheaded the

creation of Calderon’s economic platform and is a

staunch proponent of energy liberalization. He has a

broad understanding of the energy sector due to his

experience as undersecretary.

Ernesto Cordero - Undersecretary of Expenditures

BACKGROUND

Actuary degree from ITAM

Masters degree and PhD in Economics from the University of Pennsylvania

OTHER POSITIONS

P PM T PB

Profile:

Dec 2006 – to date: Undersecretary of Expenditures

2005: Undersecretary of Energy Planning and Technological

Development in the Ministry of Energy

Previous experience at the former Secretary of Energy and Mines

(involved in the design of the CRE)

Worked in BANOBRAS when Calderon headed the bank.

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS

Felipe Calderon

Reactive Active

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

204

SENER

205

Kessel has a strong economic background, but not a technical

or political one. We do not see her leading the negotiations for

structural reforms but implementing them. Her background will

be crucial for discussing important issues such as PEMEX

mounting debt and fiscal contributions, among others.

Georgina Kessel - Secretary of Energy

BACKGROUND


PhD in Economics from Columbia University, New York

OTHER POSITIONS

Dec 2006 – to date: Secretary of Energy

Jan 2002 - Dec 2006: General Director of “Casa de Moneda” (Mexico’s

National Mint)

Jul 1997 - Jan 2002: Secretary of Finance: In charge of Investment Office

and Decentralization of Mexico’s state-owned utilities.

Jan 1994 - Jan 1995: First Energy Regulatory Commission (CRE) President

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS

Felipe Calderon

Agustin Carstens

Francisco Gil Diaz

Santiago Levi

Fernando Sanchez UgarteReactive Active

P PM T PB

Profile:

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

206

Dr. Budebo is an experienced public officer. Although he lacks

technical and operational experience in terms of energy, he is

taking a prominent role in attempting to address PEMEX’s multi-

dimensional challenges.

Dr. Budebo has extensive experience in finance, having worked for

over a decade in SHCP.

Mario Gabriel Budebo – Undersecretary of Hydrocarbons

BACKGROUND

OTHER POSITIONS

Dec 2006 – to date: Undersecretary of Hydrocarbons

Feb 2003 - Dec 2006: President of Mexico’s National Pension Savings

Commission, CONSAR (Comisión Nacional del Sistema de Ahorro para el

Retiro)

Feb 2001 – Feb 2003: Chief of Staff of Secretary of Hacienda (Francisco Gil

Díaz)

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS

Agustin Carstens

Francisco Gil Díaz

Georgina Kessel

Reactive Active


PhD in Economics from UCLA (University of California, Los Angeles)

Profile:

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

207

Jordy Herrera - Undersecretariat of Energy Policy

and Technology Development

Mr. Herrera is close to Calderon and is his SENER insider. Not

surprisingly, he is the political operator in charge of leading

negotiations with Congress. He is also responsible for all

natural gas activities, including LNG. Although he will not define

the energy agenda, he will take his marching orders from the

Calderon administration directly.

BACKGROUND

Degree in Economics from Universidad Iberoamericana

OTHER POSITIONS

Po

we

r

-

Manage

closely

SUPPORTERS

Felipe Calderon

Reactive Active

Dec 2006 – to date: Undersecretary of Energy Policy and Technology

Development, SENER

2004: General Director of the Investments Office in SENER

2001 - 2003: Director of Social Communications of the PAN Parliamentary

Group in the Lower House

2000: Personal Secretary (Secretario Particular) of Felipe Calderon, when

he was the parliamentary leader of the PAN in the Lower House

1996 - 1999: Personal Secretary of Felipe Calderon, when he served as

President of the PAN National Executive Committee

NO PHOTO

AVAILABLE

Profile:

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

208

Aldo Flores Quiroga – International Affairs

Mr. Flores has no experience in the energy sector. He is a specialist

in international affairs and has a solid academic background (he is

also a professor). He recently joined SENER to lead the International

Affairs Office, which will be restructured in the future (possible

merger with the Investment Promotion Office). Perhaps Mr. Flores

will be head of the new office.

BACKGROUND

Degree in Economics from Universidad Autónoma de Nuevo León

Masters in Latin-American Studies from University of California, Los Angeles

PhD in Political Sciences from the University of California, Los Angeles

OTHER POSITIONS

Profile:

June 2007 – to date: General Director of International Affairs at SENER

Jan 2007-June 2007: Consultant to the Secretary of Economy

2005-2006: External consultant for the Food and Agriculture Organization of

the United Nations and of the Government of Dominican Republic

2003 –2006: Director General for Bilateral Economic Relations at the Foreign

Affairs Secretary

Level of Interest

Po

we

r

-

Manage

closely

Reactive Active

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

SUPPORTERS

Georgina Kessel

209

PEMEX Corporate

210

He has considerable experience as a public servant and is no

stranger to the energy sector. His financial experience is also

noteworthy and reinforces the fact that finance will be a central

tenant of reform. Reyes Heróles has a particular interest in

increasing PEMEX operating efficiencies, regarding manpower

and bureaucratic issues. However, he is not a technical person

with petroleum operating experience. As a negotiator, his focus

will be on strengthening PEMEX, implementing reform,

discussions with the union and improving operating efficiencies.

Jesus Reyes Heróles – PEMEX Director General

BACKGROUND


PhD in economics from the Massachusetts Institute of Technology

OTHER POSITIONS

P PM T PB

Profile:

2001: Founder of GEA (Grupo de Economistas Asociados)

1997 - 2000: Mexican Ambassador to the United States

1996 - 1997: Secretary of Energy

1994 - 1995: Director of Banobras (Mexico’s Social Development Bank)

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS Felipe Calderon

Guillermo Valdez

Ernesto Zedillo

Agustin Carstens

Labastida

Reactive Active

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

211

Roberto Ortega – Chief of Staff of PEMEX Director General

BACKGROUND

Law degree from UNAM

Masters degree in public administration from the London School of

Economics

OTHER POSITIONS

1997 – Jan 2007: He established Grupo de Asesoría Estratégica (GAE),

an independent government relations firm in 1997

Public administrator (“Oficial Mayor”) of both the Health and at the

Energy ministries

1994-1996: Vice-President of BANOBRAS

1989-1994: Mayor of the Benito Juárez delegation in Mexico City

NO PHOTO

AVAILABLE

Mr. Ortega is very close to Reyes Heróles. They worked together

at BANOBRAS. Ortega is the author of several books on public

administration, health, energy policy, and federalism.

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS


Raul LivasReactive Active

Profile:

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

212

Raul Livas Elizondo – Chief Operating Officer

BACKGROUND


Ph.D. in Economics from the Massachusetts Institute of Technology (MIT)

OTHER POSITIONS

2000 – 2006: He joined the private sector as Managing Director of Research

and Investment Strategy in Vector Casa de Bolsa. He left Vector and

became partner of MBD Desarrollo de Negocios, a private sector firm that

provides services to foreign firms that want to develop business in Mexico.

1998-1999: PEMEX’s Chief Planning Officer

1997 - 1998: General Director of Pemex Petrochemical

1996 - 1997: Chief of Staff of former Secretary of Energy, Jesús Reyes

Heróles, and head of the Energy Policy Unit of the Ministry of Energy

Raul Livas is one of the closest collaborators of Reyes Heróles.

He has held a number of top advisory positions at several

government agencies, including the Finance , Agriculture and

energy ministries, as well as at PEMEX and BANOBRAS. He is

one of the people Heróles trusts most and will be involved in

any reforms going forward.

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS


Roberto Ortega Lomelín

Luis TellezReactive Active

Profile:

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

NO PHOTO

AVAILABLE

213

Mr. Morales has over 21 years of experience in PEMEX. He

began his career at the Mexican Petroleum Institute (IMP) and

has held jobs in the private sector with Solar Turbines Co. and

Transportación Marítima Mexicana (TMM). Although he has the

technical background and understands the problems ahead of

PEMEX we do not see him actively supporting energy reform.

Carlos Morales Gil – PEMEX E&P General Director

BACKGROUND

Degree in Petroleum Engineering from Universidad Nacional Autónoma de

México (UNAM)

Master degree in Petroleum Engineering from Stanford University

OTHER POSITIONS

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS

Oil and gas service companies

PEMEX structureReactive Active

Jun 1 2006 – to date: PEP General Director

Nov 2004 – Jun 2006: Acting PEP General Director

Dec 2001 – Nov 2004: PEP’s Sub-Director for the South Region

Mr. Morales has been a Member of Society of Petroleum Engineers (SPE)

since 1990. He is also a member of Association of Petroleum Engineers

of México (AIPM), Colegio de Ingenieros Petroleros where he holds the

position of Vice President (CIPM) and he has been elected to the Mexican

Engineering AcademyProfile:

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

http://www.belumex.com/text/info/ene5/p8_archivos/CarlosMoralesGil.jpg

214

As PEMEX Chief Financial Officer Mr. Levin will play a

significant role in negotiating any new fiscal regime for PEMEX.

Because of his background, it is fair to assume Mr. Levin will

support reforms. However, he will not be able to gain support

within PEMEX bases because he is perceived as a technocrat

and outsider.

Esteban Levín – PEMEX ChiefFinancialOfficer

BACKGROUND

Degree in Economics from the Instituto Tecnologico Autónomo de México

(ITAM)

Master degree in Public Policy from John F. Kennedy School of Government

at Harvard University

OTHER POSITIONS

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS

Agustin Carstens

Juan Jose Suarez Coppel

Raul LivasReactive Active

October 2006 – to date: PEMEX Chief Financial Officer

He entered PEMEX in 2002 holding several positions, including:

Managing Director of Finance and Treasury of PEMEX

Acting Managing Director of Financial Information Systems in PEMEX

Investor Relations Officer

Associate - Engagement Manager at MCKINSEY & CO

Advisor to the chief of staff of the President of México (Zedillo) Profile:

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

215

Ernesto Rios – Dir. Corporate Engineering and Project Development

BACKGROUND

Degree in Chemical Engineering from Universidad Nacional Autonoma de

Mexico (UNAM)

Masters degree from Cornell University, New York

OTHER POSITIONS

December 2006 – to date: Interim Director of Corporate Engineering and

Project Development in PEMEX (Encargado de Despacho)

May 2001 – December 2006: He was deputy director of Corporate

Engineering and Project Development in PEMEX

1968- 2000: He worked in Grupo Bufete Industrial, an important Mexican

engineering company were he develop. He held the following positions:

EVP of Operations and VP of Engineering

Level of Interest

Po

we

r

-

Manage

closely

Profile:

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Although Mr. Rios has been in PEMEX for only 6 years, he has

worked in energy related projects all his life. In Grupo Bufete

Industrial he lead many projects involving PEMEX and CFE. He

is a respected professional, and in his current position, he will

influence the development of future projects in PEMEX.

SUPPORTERS

Raúl Moñoz LeosReactive Active

216

Jose Antonio Ceballos Soberanis, Director PEMEX Refining

BACKGROUND

Degree in Petroleum Engineering from Universidad Nacional Autonoma de

Mexico (UNAM)

OTHER POSITIONS

December 2006 – to date: General Director of Pemex Refining

April 2006 – December 2006: Director General of the Mexican Petroleum

Institute (IMP)

April 2001 – April 2005: Chief Operations Officer (Director Coorporativo de

Operaciones) of PEMEX

January 1995-April 2001: Director of Pemex Exploration and Production

Level of Interest

Po

we

r

-

Manage

closely

Profile:

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Mr. Ceballos has a long and successful professional career

within PEMEX. In his current position he will not be leading any

efforts regarding hydrocarbons reform. We perceive him as

being much more open to private participation and reform than

many of his peers. He led the nitrogen injection project at

Cantarell.

SUPPORTERS

Adrian Lajous

E&P technical and regional staff

(including Heber Cinco Ley and

Teodulo Gutierrez) Reactive Active

217

PEMEX Career Engineers

218

Héber Cinco Ley – Mexican Petroleum Institute

Dr. Cinco Ley has significant experience in the hydrocarbons

sector, being well known for his fractured well behavior studies.

Among his previous experiences in the sector, he used to be a

technical advisor for PEP. We do not see him as an active

supporter of reforms.

BACKGROUND

Degree in Petroleum Engineering from Universidad Nacional Autonoma de

Mexico (UNAM)

Master degree in Physical Engineering of Reservoirs from UNAM

PhD. in Petroleum Engineering from Stanford University

OTHER POSITIONS

February 2007 – to date: General Director of the IMP

2003 – 2006: PEP’s Deputy Technical Director of Exploitation

Director General of Asesoría y Servicios Petroleros, a private company

Director General of Consultoría y Servicios en Ingeniería Petrolera

Director General of Aspetrol Testing

1979-1993: Technical advisor in PEP

Level of Interest

Po

we

r

-

Manage

closely

P PM T PB

SUPPORTERS

IMP

PEMEX technical

staff

Carlos Morales GilReactive Active

Profile:

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

219

Mr. Gutierrez is has been involved in the instrumentation of

artificial production systems in PEMEX designed to increase

production and has also been involved in modernizing the

technology used in the Marine Regions, implementing field

simulation models at Ku Malob Zaap and Ek Balám. We do not

see him as a promoter of reforms.

Teódulo Gutierrez Acosta - Deputy Technical Director of Exploitation

BACKGROUND

OTHER POSITIONS

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS

Carlos Morales Gil

PEMEX technical staff

IMPReactive Active

Jan 2007 – to date: Deputy Technical Director of Exploitation

Mr. Gutierrez has over 20 years of experience in PEMEX:

Served as Deputy Director of the South Region, Deputy Director of

Human Resources, Competitiveness and Innovation in PEP, and Deputy Director for Reservoir Administration

He started his professional career at the IMP developing mathematical

models, integral simulation systems and reservoir technology methods.Profile:

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Degree in Petroleum Engineering from Universidad Nacional Autónoma de

México (UNAM)

Master degree in Physical Engineering of Reservoirs ( Ingeniería Física de

Yacimientos) from UNAM

220

Antonio Escalera Alcocer - Deputy Technical Director of Exploration

BACKGROUND

OTHER POSITIONS

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS

Sergio Guaso

Alfredo Guzman (former North

Region Director)

North Region Management

Reactive Active

Jun 1 2006 – to date: PEP’S Deputy Technical Director of Exploration

He has held important positions in PEMEX, such as:

Administrator of the Burgos Complex

Administrator of the Reynosa Exploration Complex

Profile:

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Degree in Petroleum Engineering from Instituto Politécnico Nacional

Master degree in Physics Reservoir Engineering (Ingeniería Física de

Yacimientos) from UNAM

Mr. Escalera has a long trajectory within PEMEX and is

recognized to have done a very good job as administrator

of the Burgos Complex, with significant increases in

natural gas production. That said, we believe Mr. Escalera

is also part of the “traditional” PEMEX school of thought

that will not favor reforms.

221

PEMEX PEP

222

Suro is a capable technical professional, but he is not in favor of

supporting reforms or changes in PEMEX. Suro is part of

PEMEX’s school of though that believes the company can

maintain production and increase reserves on its own if more

money is given to the company. He has centralized information

flow from each of the regions through his office.

Vinicio Suro – DeputyDir. forEvaluationandPlanning

BACKGROUND

Degree in Geophysics

PhD. in Geostatistics from Stanford University

OTHER POSITIONS

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS

Carlos Morales Gil

Oil and gas service companies

Local industry

PEP structure at a regional level

Reactive Active

Jun 1 2006 – to date: Deputy Dir. for PEP’s Evaluation and Planning

He has over 20 years of experience in PEMEX, holding relevant positions

such as:

Associate Managing Director of Hydrocarbon Reserves of PEP

Chief of the Hydrocarbon Reserves Unit of PEP

Profile:

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

223

Mr. Hernandez has a long time career within PEMEX. Among his

responsibilities, he is now involved in the creation of PEMEX

short term production projections. We perceive him as being

more open to reforms and private participation in the sector.

Jesús Hernandez San Juan

BACKGROUND

Degree in Electrical Mechanical Engineering (Ingeniero Mecánico

Electricista) from Universidad Veracruzana

OTHER POSITIONS

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS

Carlos Morales Gil

Reactive Active

2006 – to date: PEP’s Deputy Director of Distribution and Marketing

2006 – Feb 2007: PEP’s Deputy Director of Operations and Trading

Other positions held by Mr. Hernández in PEMEX include:

Associate Managing Director of Transport and Distribution of

Hydrocarbons of PEP

Deputy Manager of Transport and Distribution of Gas and

Condensates of PEP

Chief of the Compression Systems Department of PEPProfile:

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

224

Sergio Guaso has been responsible for the design and

instrumentation of the Burgos Multiple Service Contracts. As

head of the New E&P Contracts Office, we believe he will be

actively involved in the design of any efforts that involve

opening spaces for private sector participation.

Sergio Guaso – New E&P Contracts Office

BACKGROUND

Degree Economics from Universidad Autónoma Metropolitana

Master degree in Economics from El Colegio de México

OTHER POSITIONS

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS

Carlos Morales Gil

Antonio Escalera Alcocer

Jorge Fernandez VenegasReactive Active

July 2002 – to date: Director of the Multiple Service Contracts Office,

now New E&P Contracts Office

Feb 2002 – June 2002: Associate Managing Director of Economic

Analysis of PEP (Gerente de Análisis Económico PEP)

Feb 1998 – Feb 2002: Associate Managing Director of Investment

Resources of PEP

Aug 1997 – Jan 1998: Economic Advisor of P.M.I. Holdings North

America, Inc. Profile:

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

225

Jose Luis Sanchez Bujanos

BACKGROUND

Degree in Geophysics Engineering from UNAM

Master degree in Reservoir Engineering from UNAM

PhD in Petroleum Engineering from the University of Texas at Austin

OTHER POSITIONS 2006 – to date: Manager of Regional Studies, Technical Exploitation

Directorate (Gerente de los Centros Regionales de Estudios de

Explotación de la Subdirección de la Coordinación Técnica de

Explotación). Leader of the Chicontepec “Aceite Terciario del Golfo”

Project.

2003 – 2005: Worked in the Regional Studies and Field Development

areas of the Technical Exploitation Directorate.

1996-2002: Coordinator, Technology of Naturally Fractured Reservoirs

Sanchez Bujanos has been in PEMEX over 27 years. He has been

involved in important projects including coordinating the

Cantarell’s special studies group and feasibility studies for Akal. He

has significant technical experience.

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS

Heber Cinco Ley

Pedro Silva

Reactive Active

Profile:

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

226

PEMEX Regional Deputy Directors

North Region

- Jose Fernandez Venegas -

Degree in Petroleum Engineering from UNAM

OTHER POSITIONS:

Mr. Fernandez has specialized in enhanced

recovery mechanisms for reservoirs.

He was former administrator of the Veracruz

Complex and also production administrator for

the Luna and Bellota – Chinchorro fields.

Northeast Marine Region

- Javier Hinojosa Puebla -

Degree in Petroleum Engineering from

University of Mexico

Mr. Hinojosa has over 26 years of extensive

experience in the oil industry. He has held

several positions at PEP, where he has built his

carrier starting as Operations Engineer. Prior to

his current position, he was Southwest Marine

Region Deputy Director.

South Region

- Jorge Serrano Lozano -

Degree in Petroleum Engineering from UNAM

OTHER POSITIONS:

Mr. Serrano joined PEMEX in 1985 and prior to

that he used to work at the IMP.

1998 – 2003: North Region Planning Manager

2003 – 2004: Burgos Basin Asset Manager

2004 – 2007: Samaria-Luna Asset Manager

Southwest Marine Region

- Pedro Silva Lopez -

OTHER POSITIONS:

Deputy Director of Operations Coordination of

PEMEX

Executive Director of PEP’s Strategic Gas

Program

PEP’s Associate Managing Director of Strategic

Planning

227

PEMEX PGPB

228

Roberto Ramírez Soberón– PGPB General Director

BACKGROUND

Degree in Chemical Engineering from Universidad Nacional

Autónoma de México (UNAM)

PhD in Economics from the University of New York

OTHER POSITIONS

June 2006 – to date: PGPB’s General Director

2005 – June 2006: Acting Deputy Director of PGPB (Encargado de

Despacho)

1997-2005: PGPB’s Deputy Director of Planning

Other PGPB’s possitions held: Commercial Associate Managing

Director and Associate Managing Director of Urban Distribution

P PM T PB

Profile: P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Mr. Ramirez Soberón has worked in PEMEX for over

20 years. Although he has vast experience in the

sector, he is not perceived as a strong leader with a

clear view of how to address PGPB’s numerous

challenges.

SUPPORTERS

Jose Antonio CeballosReactive Active

Level of Interest

Po

we

r

-

Manage

closely

229

PGPB Deputy Directors

ARMANDO

ARENAS

BRIONES

Deputy Director of Production since 1996

OTHER POSITIONS

Associate Managing Director and Superintendent of Nuevo Pemex

petrochemical complex

General Coordinator of Acquisitions Engineering of PEMEX

VÍCTOR

DOMÍNGUEZ

CUELLAR

OTHER POSITIONS

Associate Managing Director of Planning and Evaluation of PGPB

Deputy Manager of Planning of PGPB

General Superintendent of Electromechanic Processes and Public Works

of PEP

Member of the following boards : Gasoductos de Chihuahua, Gasoductos

de Tamaulipas, Gasoductos Servicios and TDF

Acting Deputy Director of Pipelines since 2007

LUIS FELIPE

LUNA MELOOTHER POSITIONS

Commercial Representative in Tokyo and Deputy Manager of Analysis of

PMI

President of PMI Northamerica

Deputy Director of Natural Gas since 1996

230

PGPB Deputy Directors

MIGUEL

FRANCISCO

BUENO

FERNANDEZ

Acting Deputy Director of Liquefied Gas and Basic Petrochemicals

since 2007

OTHER POSITIONS

Associate Managing Director of Operations of PGPB

Associate Managing Director of Business Planning of PGPB

Associate Managing Director of Liquefied Gas Trading of PGPB

SALVADOR

ORTIZ

VERTIZ

OTHER POSITIONS

General Coordinator of Mining of the Ministry of Economy

Assistant Director and Deputy Director of Sectorial Studies for Grupo

Fiananciero Banamex-Accival

Senior Advisor to Energy Sector and Basic Industries of Grupo Financiero

Banamex-Accival

Deputy Director of Planning since 2007

AGUSTIN

CASTRO

PEREZ

OTHER POSITIONS

Commercial Associate Managing Director of Evaluation and Information of

PGPB

Associate Managing Director of Programming of PGPB

Deputy Manager of Information of PGPB

Member of the Gasoductos de Chihuahua board

Deputy Director of Management and Finance since 2006

231

CFE

232

Mr. Elias Ayub is a very experienced public servant that has

proved to have strong leadership skills and a pro- business

approach. With his ratification, Mr. Elias Ayub begins his third and

consecutive term as head of the CFE, a position he was first

appointed to in January 1999 under former President Zedillo.

Degree in Civil Engineering from the Universidad Anáhuac

MBA from Harvard University

OTHER POSITIONS

Profile:

Director of Airports and Ancillary Services

Executive Coordinator of the Secretariat for Urban Development and

Public Works of the Government of the State of Mexico

Director General of the Mexican Fund for Social Activities (FONAPAS)

Private Secretary of the Government of the State of Mexico

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS

Felipe Calderon

CFE personnel

PRI “Technocracy”Reactive Active

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Alfredo Elias Ayub – CFE General Director

BACKGROUND

233

Mr. Laris has been in charge of the development of natural gas

projects within CFE. He has been responsible for all IPP

development, including natural gas transportation contracts with

private companies. His current principal focus is on LNG supply

and terminals, and in particular the Manzanillo LNG project.

Degree in Civil Engineering from the Universidad Nacional Autonoma de

Mexico (UNAM)

Masters degree in “Mecanica de Suelos” from UNAM

OTHER POSITIONS

Profile:

1999 – to date: Director of Third-Party Financed Projects CFE

1994 – 1998: Vice-president of Hydraulic Infrastructure in Grupo Tribasa

1988 – 1991: General Director of Altos Hornos de Mexico

1986 – 1988: Undersecretary of Public Companies Industry (Industria

Paraestatal) in the Secretary of Energy, Mines and State Companies Industry

(now SENER)

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS

Alfredo Elias Ayub

CFE structureReactive Active

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Eugenio Laris Alanis – Director of Third-Party Financed Projects

BACKGROUND

234

As finance director, Mr. Santoyo is responsible for managing

all the investment programs and private sector investments

in the sector.

Law Degree from the Escuela Libre de Derecho

OTHER POSITIONS

Profile:

Secretary of the Advisory Commission of Foreign Financing for the Public

Sector

1978 – 1986:

Chief of Advisors of the Finance Undersecretary

Director of National Credit Institutions

General Director of Development Banking

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS

Alfredo Elias Ayub


P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Francisco Santoyo Vargas – Finance Director

BACKGROUND

235

Degree in Communications and Electronics Engineering from the University

of Guadalajara

Masters in Business Administration from Universidad Anahuac

OTHER POSITIONS

Profile:

May 2007 – to date: Director of Operations

2002 - 2007: Manager of Transmission and Transformation

2000 - 2002: Deputy Director of Transmission, Transformation and Control

1975: Begins his career at CFE

Level of Interest

Po

we

r

-

Manage

closely

SUPPORTERS

Alfredo Elias Ayub


P PM T PBP= Politician


T: Technical Energy

Expert

PB: Pro-Business

Nestor Moreno Díaz – Operations Director

BACKGROUND

Nestor Moreno was appointed Operations Director in May

2007. Despite the fact that he is not a public figure, he has

worked in CFE for over 30 years and has extensive

knowledge about the division he now leads. Mr. Moreno has

worked his way up in CFE over the years.

236

Unions

237

Unions - Mexico’s Energy Sector

Unions have played a very visible and powerful role in Mexico over the last

century. From the PRI’s inception, unions have been an integral part of the party’s

political machine that historically allowed it to secure votes, keep inflation in

check and unemployment down. The dynamics between unions and the PRI have

increasingly changed since the PRI lost the presidency in 2000. Certain union

factions now support the PRD. Left unchecked, unions have actually gained

increased levels of power and control since the 2000 presidential elections.

According to the American Chamber of Commerce, approximately 30% of the

Mexican workforce is unionized. Most of these unions are affiliated with the

Labor Congress (“Congreso del Trabajo”), which represents 85% of all unionized

workers. The main official association of unions, the Mexican Confederation of

Workers (CTM) is believed to have around 8 to 10 million members.

In terms of the energy sector, there are three relevant unions:

1. Pemex Union (STPRM; Sindicato de Trabajadores Petroleros de la República

Mexicana)

2. CFE’s Union (SUTERM; Sindicato Único de Trabajadores Electricistas de la República

Mexicana)

3. LFC Union (SME; Sindicato Mexicano de Electricistas)

STPRM & SUTERM are affiliated with the CTM. SME has maintained its independence.

238

STPRM - PEMEX Union

The STPRM was officially established in 1938, after President Lázaro

Cardenas nationalized the oil industry.

The government (PRI) used PEMEX and its union as a substantial

source of cash flow (still does) and as a tool for political gain and

control

In return, PEMEX and its union received economic privileges. (Under

the Mexican Labor Law, unions are not subject to government

audits)

Carlos Romero Deschamps - STPRM General Secretary

Entered PEMEX in 1961. Became leader of the union in 1993; was

recently re-elected to serve as General Secretary from 2007 – 2012.

He has been a PRI senator and deputy on several occasions.

He was accused (and cleared) for his role in funneling US$ 127 million

from PEMEX to finance the PRI’s campaign in the 2000 presidential

elections (PEMEX-Gate).

239Any reforms will need to have, to some extent, buy-in from the union

STPRM - PEMEX Union

Where does STPRM’s power reside?

80% of PEMEX workforce is unionized

5 out of 11 PEMEX Board members are union representatives

Due to the lack of competition in the industry, unionized workers continue to receive

unparalleled benefits. Under the collective contract:

• PEMEX’s retired employees or their survivors receive the same benefits as existing

union workers from all ongoing labor negotiations

• PEMEX has historically had limited flexibility to move unionized workers within

regions/ projects

• Bargaining agreement contains provisions that shares increased windfall with union

when oil prices increase

Despite the PRI’s loss of the presidency, the PEMEX union continues to be an

extremely monolithic structure.

Traditionally, support from the union has come through economic privileges.

With PEMEX labor liabilities of nearly US$ 43 billion, this arrangement is

becoming increasingly jeopardized.

Any type of alliance between PEMEX and the private sector will need to

address how to deal with PEMEX’s unionized workers.

240

Secretary – Luis Ricardo Aldana

GENERAL DETAILS

Political Party: PRI

State: Veracruz

Current Secretary of the Energy Commission and member

of the Navy Commission and the Labor and Social Works

Commission

BACKGROUND

Electrical/ Mechanical Engineer

OTHER POSITIONS

In 2002, Aldana was accused of illegally transferring at

least US$ 70 million from PEMEX to the PRI during the

2000 presidential campaign through the PEMEX Union

(PEMEX-Gate scandal).

Aldana understands that the status-quo cannot be

sustained. He is likely to be willing to negotiate.

PEMEX Union Treasurer since 1978

Council of the PRI National Council (2004 – 2006)

Federal Senator (2000 – 2006)

Profile:

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

241

Congress

242

Lower House

243

Lower House Presidency

244

María Elena Álvarez Bernal

GENERAL DETAILS

Political Party: PAN

***President of the Lower House Executive Legislative Board “Mesa

Directiva”

BACKGROUND

PhD in Political Sciences from Universidad Nacional Autnóma de México (UNAM)

OTHER POSITIONS

2003-2006: Executive Secretary in the Women’s National Institute


Ms. Alvarez is a long time panista. Wife of Abel Vicencio Tovar, one

of PAN’s most prominent members (two time Secretary General

and President of the Party during the late seventies). She has built

her career within the party lines and has extensive legislative

experience.

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Profile:

*** Once Jorge Zermeño resignation becomes official.

1997-2000: Senator and Vice-president of the Senate

1994-1997: Lower House deputy


1964-1966: PAN’s National Secretary for Women’s Political Participation

1958-2006: PAN’s National Adviser (“Consejera Nacional”)

245

Hector Larios Cordoba

GENERAL DETAILS


PAN leader in the Lower House and President of the Political

Coordination Council (Junta de Coordinación Politica)

BACKGROUND

Degree in Engineering

OTHER POSITIONS

2000-2006: Federal Senator, acted as the PAN leader from 2005 to 2006


1994-1997: Local congressman of the State of Sonora

Larios is a well known politician and political operator,

especially in the northern state of Sonora. He is

considered an established, pro-business politician, who

is conservative with a strong sense of loyalty to party

ideology. Based on his previous legislative positions,

Larios has shown a strong propensity to negotiate with

other political forces and to forego the attempt to impose

his conservative party ideals on other political parties.P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Profile:

246

Emilio Gamboa

Gamboa is an experienced politician, highly known for his

political use of media. He served as coordinator of the failed

PRI 2000 presidential campaign of Francisco Labastida. He has

been accused of having close relationships with the powerful

Mexican media groups and the families that own them to

ensure favors.

GENERAL DETAILS


Leader of the PRI group in the Lower House

BACKGROUND

Degree in Industrial Relations from Univesidad Iberoamericana

OTHER POSITIONS

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Profile:

2000-2006: Federal Senator

1998-1999: Undersecretary of Communications in the Ministry of the Interior

1994-1995: Director of the National Lottery

1993-1994: Secretary of Communications and Transportation (SCT)

1991-1993: Director of the Mexican Institute of Social Security (IMSS)

1988-1990: Director of the National Workers’ Housing Fund (INFONAVIT)

1982-1988: Private Secretary of President Miguel de la Madrid

http://images.google.com/imgres?imgurl=http://www.mexico-tenoch.com/gobernadores/DiputadosPRI/P418.JPG&imgrefurl=http://www.mexico-tenoch.com/gobernadores/DiputadosPRI/INDEXAB.htm&h=199&w=159&sz=6&hl=en&start=3&um=1&tbnid=FwClBL91KiQkVM:&tbnh=104&tbnw=83&prev=/images%3Fq%3Demilio%2Bgamboa%2Bpatron%26svnum%3D10%26um%3D1%26hl%3Den%26rls%3DFUJA,FUJA:2005-27,FUJA:en

247

Javier Gonzalez Garza

GENERAL DETAILS

Political Party: PRD

Leader of the PRD group in the Lower House

BACKGROUND

Degree from the Univesidad Iberoamericana

OTHER POSITIONS

1999-2000: Mexico City Undersecretary of Government during Cuauhtémoc

Cardenas administration

He served as Electoral Secretary (Secretario del Comité de acción

electoral) of the PRD, where he was in charge of supervising all electoral

processes that the PRD was involved in.


Gonzalez Garza is a senior, traditional perredista,

identified as part of former presidential candidate

Cuauthemoc Cardenas’ inner circle. He is perceived

to be more of a moderate, as opposed to hardliners

such as former Zacatecas Governor and AMLO’s right

hand man, Ricardo Monreal. As leader of the second

most important party in the Lower House, he will play

and important role in negotiations.

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Profile:

http://images.google.com/imgres?imgurl=http://201.147.98.27/album_comisionesLX/fotos_lx/P163.jpg&imgrefurl=http://201.147.98.27/album_comisionesLX/diputados_alfabeticonp.asp%3Fdistrito%2520federal,T,9&h=199&w=160&sz=6&hl=en&start=1&um=1&tbnid=EUe6Q02Bs_xWeM:&tbnh=104&tbnw=84&prev=/images%3Fq%3Djavier%2Bgonzalez%2Bgarza%26svnum%3D10%26um%3D1%26hl%3Den%26rls%3DFUJA,FUJA:2005-27,FUJA:en

248

Energy Commission

249

Lower House Energy Commission

PRESIDENT - David Maldonado Gonzalez (PAN)

Secretaries

María de Jesús Guerra (PAN)

Alonso Manuel Lizaola (PAN)

Ramón Félix Pacheco (PRD)

Luis Ricardo Aldana (PRI)

José Ascensión Orihuela (PRI) José Antonio Arévalo (PVEM)

Robinson Uscanga Cruz

(Convergenicia)

Other Members

• Salvador Arreondo Ibarra (PAN)

• Juan Enrique Barrios Rodriguez (PAN)

• Dolores De María Manuell-Gómez Angulo (PAN)

• Luis Alonso Mejia Garcia (PAN)

• Oscar Miguel Mohamar Daintin (PAN)

• Raul Alejandro Padilla Orozco (PAN)

• Rolando Rivero Rivero (PAN)

• Juan Jose Rodriguez Prats (PAN)

• Yadhira Tamayo Herrera (PAN)

• Joaquin Humberto Vela Gonzalez (PT)

• Jose Antonio Almazan Gonzalez (PRD)

• Moises Felix Dagdug (PRD)

• David Mendoza Arellano (PRD)

• Rafael Elias Sanchez Cabrales (PRD)

• Antonio Soto Sanchez (PRD)

• Monica Fernandez Balboa (PRD)

• Pedro Landero Lopez (PRD)

• Horacio Duarte Jaquez (PRI)

• Marco Antonio Bernal Gutierrez (PRI)

• Arturo Martinez Rocha (PRI)

• Mariano Gonzalez Zarur (PRI)

• Alberto Amador Leal (PRI)

250

Lower House Energy Commission Integration

12 members (40.0%)

8 members (26.7%)

7 members (23.3%)

1 member (3.3%)

1 member (3.3%)

1 member (3.3%)

PVEM

PT

Convergencia

PAN

PRD

PRI

251

Although he has technical training, he has focused his

professional career on politics. He was supported for his deputy

position by Baja California Governor, Eugenio Elorduy, and if the

PAN is able to win the 2007 gubernatorial election, he is likely to

return to his home state. Maldonado is practical and pro-active and

appears open to energy reforms, understanding change is needed.

President – David Maldonado

GENERAL DETAILS


State: Baja California

Current President of the Energy Commission and member of the

Radio, Television and Cinematography Commission

BACKGROUND

Electrical - Mechanical Engineer

Postgraduate studies in Pubic Administration

OTHER POSITIONS

1999 – 2001: Undersecretary of Social Development for the State of Baja California

2001 – 2005: Private Secretary to Governor Eugenio Elorduy of Baja California

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Profile:

-

Manage

closely

Level of Interest

Po

we

r

ActiveReactive

252

Secretary – Ramón Félix Pacheco

GENERAL DETAILS


State: Federal District

Current Secretary of the Energy Commission and member of

the Radio, Television and Cinematography Commission and the

Labor and Social Works Commission

BACKGROUND

Chemical Engineering

1975 - 1988: He worked in Luz y Fuerza del Centro as a Lab Technician

Since 1988 he has been working in the Mexican Electrician Union (Sindicato Mexicano de

Electricistas)

It is highly unlikely to see Mr. Pacheco favoring pro-

reform efforts or initiatives intended to change the

status – quo.

OTHER POSITIONS

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Profile:

-

Manage

closely

Level of Interest

Po

we

r

ActiveReactive

253

Budget Commission

254

President - Raul Padilla Orozco

GENERAL DETAILS


State: Jalisco

BACKGROUND

Degree in Public Accounting

Master degree in Business Management (Alta Dirección)

OTHER POSITIONS

2003-2006: President of CONACANACO (Confederación de Cámaras Nacionales de Comercio,

Servicios y Turismo)

2001-2003: President of the Guadalajara Chamber of Commerce (Cámara Nacional de

Comercio de Guadalajara)

1982-2003: General Director of Grupo Vinotecnia

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Profile:

Raul Padilla is considered an established, pro-

business man, although he has limited political

experience. In addition to presiding over the

budget commission, he is a member of the

energy and finance commissions

255

Secretary - Joel Ayala

GENERAL DETAILS


State: Baja California

BACKGROUND

Degree in Economy from Universidad Nacional Autnóma de México

(UNAM)

OTHER POSITIONS


1998 – to date: General Secretary of the State Workers Union Federation (Federación de

Sindicatos de Trabajadores al Servicio del Estado (FSTSE))


P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Profile:

Joel Ayala’s career has always been associated

with his activities within the FSTSE union. He is an

experienced politician and an old guard,

traditional priista. He’s opportunistic and will seek

to take advantage of his position within the

unions. He needs to be managed closely. Arch-

rival of Elba Esther Gordillo.

256

Secretary - Jorge Emilio Gonzalez

GENERAL DETAILS

Political Party: PVEM (Partido Verde Ecologista de Mexico)


President of the PVEM, and son of the founder of the party

BACKGROUND

Degree in Business Administration from Universidad del Valle de México

OTHER POSITIONS


2001 – to date: President of the PVEM party


P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Profile:

The PVEM’s relevance has revolved around its

repeated indifference to selling its support to the

highest bidder (to date, has been the PAN and the

PRI). Jorge Emilio Gonzalez, as party president lacks

credibility as a politician and has been associated with

scandals of corruption. It is likely that the PVEM will

support reforms if the price is right.

257

Secretary -Alejandro Chanona

GENERAL DETAILS

Political Party: Convergencia


Leader of the Convergencia Lower House fraction

BACKGROUND

Degree in International Relations from Universidad Nacional Autnóma

de México (UNAM)

Master degree in European Political Studies from the University of

Essex, UK

PhD in Political Science from the University of Essex, UKOTHER POSITIONS

2003-2006: Secretary General of Convergencia

1996-2000: General Secretary of UNAM’s Faculty of Political and Social Sciences

1995-1996: Chief Advisor to the Secretary of Foreign Affairs under President Zedillo

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Profile:Mr. Chanona is a former priista and part of Dante Delgado’s

(Convergenica party founder) inner circle. We believe that

Convergencia may continue to stay fairly tight with the PRD,

as the relationship between the two parties has been

mutually beneficial. That said, the party has started to draw

some distance between itself and AMLO, as seen in the

recent Yucatan elections. The party is likely to embrace

more moderate stances going forward.

258

Member - Susana Monreal

GENERAL DETAILS


State: Zacatecas

BACKGROUND

Degree in Public Accounting

OTHER POSITIONS

2005-to date: PRD’s national counselor (Consejera

Nacional)

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Profile:

Susana Monreal is sister of Ricardo Monreal,

former governor of Zacatecas and one of

AMLO’s closest collaborators. Ms. Monreal

represents the radical PRD wing and will likely

oppose all efforts of reforms.

259

Finance Commission

260

President - Charbel Jorge Estefan Chidiac

GENERAL DETAILS


State: Puebla

BACKGROUND

Degree in Economy from ITAM (Instituto Tecnológico Autónomo de

México)

OTHER POSITIONS


Secretary of Social development under current Puebla Governor

Mario Marin Torres

Secretary of the General Comptroller Office of Puebla, during Manuel

Bartlett’s term as governor

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Profile:

As president of the Lower House finance commission,

Estefan wields significant power. He is perceived as the

typical priista, and will follow the party line. He is close to

Manuel Bartlett, who has been a strong and vocal

opponent to reforms in the energy sector.

261

Jose Murat - Member

GENERAL DETAILS


State: Oaxaca

BACKGROUND

Law degree from Universidad Nacional Autónoma de México (UNAM)

Murat is close to Roberto Madrazo and unsuccessfully ran

against Emilio Gamboa for the PRI leadership in the Lower

House. Despite the fact that he has experience and

political muscle, he represents the old priista guard and

has been involved in several scandals that have soiled his

reputation. He has increasingly interest in energy matters,

opposing all efforts proposed.

OTHER POSITIONS

2006 – 2009: Federal Deputy (this is the third time he has held a

congressional position)

1998-2004: Governor of the state of Oaxaca

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Profile:

http://es.wikipedia.org/wiki/Imagen:Jose_Murat.jpg

262

Member - Antonio Soto

GENERAL DETAILS


State: Michoacán

BACKGROUND

Degree in Political Science and Public Administration

Master degree in Public Administration

OTHER POSITIONS


1998-2004: PRD president in Michoacán

1992-1995: Local congressman of the state of Michoacán

1990-1992: Mayor of the Tumbiscatío municipality in Michoacán

Antonio Soto is a moderate PRDista. He is part of the

finance and energy commissions in the Lower House. He

is more open to discuss reforms in the sector than other

members of his party.

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Profile:

263

Member – Jose Manuel Minjares

GENERAL DETAILS



BACKGROUND

Degree in Public Accounting from Universidad La Salle

Masters degree in Public Administration

OTHER POSITIONS

2003-2005: Public Administrator (“Oficial Mayor”) at SENER (during

Calderon’s term as Secretary of Energy)

2000-2003: Federal Lower House Deputy

1997-2000: Local congressman of the Federal District

Minjares appears to be one of the most interested

deputies in energy topics. He has a direct connection with

President Calderon (they worked together both at

Banobras and in SENER) and he has influence within the

PAN group in the Lower House. In addition to participating

as a member of the finance commission, he is also in the

budget commission.

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Profile:

264

Constitutional Affairs Commission

265

President - Raymundo Cardenas

GENERAL DETAILS


State: Zacatecas

BACKGROUND

Degree in Chemical Engineering from Universidad Autónoma de

Zacatecas

OTHER POSITIONS


2004: Secretary General of the PRD

He served as Zacatecas’ Government Secretary during Ricardo

Monreal’s governorship (1998-2004)

Despite the fact that Cardenas worked with Ricardo

Monreal when he was governor of Zacatecas, he is not

believed to be close to him or AMLO’s group. Cardenas is

considered an opportunistic politician. Regarding energy,

it is likely he will tow the party line.

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Profile:

266

Member - Carlos Armando Biebrich Torres

GENERAL DETAILS


State: Sonora

BACKGROUND

Law degree

OTHER POSITIONS

1999-2000: Undersecretary of Labor under President Zedillo

1994-1995: Legal Affairs Director at SENER

1973-1975: Governor of the state of Sonora

1970-1973: Undersecretary of Interior, during President Echeverria administration


Carlos Armando Biebrich is an experienced politician. In

2000, he disappeared from the political arena, but returned

in 2002 as part of the PRI National Committee under

Roberto Madrazo’s term as party president. He is part of

the PRI old guard, but we expect him to vote along party

lines. P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Profile:

267

Member - Juan Jose Rodriguez Prats

GENERAL DETAILS

Political Party: PAN (former priista)

State: Tabasco

BACKGROUND

Law Degree from Universidad Veracruzana

OTHER POSITIONS

1991-1994: Lower House deputy (from the PRI)

1997-2000: Lower House deputy (from the PAN)

2000-2006: Federal Senator (PAN)

Rodriguez Prats is an experienced politician. In 1994,

he ran for the Tabasco Governorship against AMLO

and Roberto Madrazo. He has been a legislator over

the last decade, and presided over the Senate energy

commission (2000-2003).

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Profile:

268

Senate: 2006 - 2012

269

Senate Presidency

270

Manlio Fabio Beltrones

Beltrones has substantial experience as a political operator. He

retains strong ties to the National Confederation of Popular

Organizations (CNOP), which contains about one-third of the PRI’s

hardcore voters. During President Fox Administration, Beltrones

led a group of deputies in opposing Fox initiatives on electricity,

comprehensive fiscal reform, and PEMEX fiscal reform. He will

play a significant role in any reform negotiations as PRI leader in

the Senate.

BACKGROUND

Degree in Economics from UNAM

OTHER POSITIONS 2006-2012: He holds a senate post

1991-1997: Governor of the state of Sonora

1988-1991: Undersecretary of Interior

GENERAL DETAILS


President of the Senate Executive Legislative Board “Mesa Direciva” and leader of

the PRI fraction in the senate

P PM T PB

Profile:P= Politician


T: Technical Energy

Expert

PB: Pro-Business

1985: PRI president in the state of Sonora

1982-1985: Federal deputy

1976: Advisor to Jesus Reyes Heróles (father of current PEMEX CEO)

http://es.wikipedia.org/wiki/Imagen:Manlio_Fabio_Beltrones.jpg

271

Santiago Creel Miranda

BACKGROUND

Degree in Law from UNAM

Graduate studies in law from Georgetown University

Master degree in Law from The University of Michigan

OTHER POSITIONS

2005- 2006: Creel lost the PAN primaries against Felipe Calderon for presidency

2000-2005: Secretary of Interior under President Fox Administration

2000: Ran as PAN’s candidate for Mexico City’ mayoral election. He lost to AMLO


GENERAL DETAILS


President of the Senate Political Coordination Council “Junta de Coordinación

Política” and leader of the PAN fraction in the senate

P PM T PB



T: Technical Energy

Expert

PB: Pro-Business

Creel’s term as Secretary of Interior was characterized by a

failure to negotiate and reach agreements with his

counterparts. He was often viewed as indecisive, naïve and

weak. His recent political losses (DF and PAN presidential

candidacy) could undermine his leverage in the Senate as

President of the Political Coordination Council. Rather than

defining the stances of the PAN in the Senate, we see him

following the party line.

http://images.google.com/imgres?imgurl=http://content.answers.com/main/content/wp/en/thumb/0/06/180px-SCreelM.jpg&imgrefurl=http://www.answers.com/topic/santiago-creel&h=231&w=180&sz=7&hl=en&start=1&um=1&tbnid=zDbfkp9Uw8RMNM:&tbnh=108&tbnw=84&prev=/images%3Fq%3Dsantiago%2Bcreel%26svnum%3D10%26um%3D1%26hl%3Den%26rls%3DFUJA,FUJA:2005-27,FUJA:en

272

Carlos Navarrete Ruíz

Navarrete founded the Socialist Mexican Party, and the National

Democratic Front, which evolved into the PRD in 1989. Navarrete is

perceived as a moderate Perredista and member of the “Chuchos” a

powerful faction within the PRD that favors negotiation and dialogue as

opposed to the uncompromising positions of some of the more radical

elements in the PRD. He s currently being perceived as one of the leading

Perredistas trying to rebuild a good relationship with the private sector.

BACKGROUND

Degree in Law from UNAM

Master degree in Law from The University of Michigan

OTHER POSITIONS

2000 – 2006: Substitute senator to PRD Senator Jesus Ortega

2003- 2005: PRD Secretary General

1999-2002: PRD’s Comunication and Media Secretary

1996-1999: he was PRD’s Planning Secretary (Secretario de Planeación del CEN)


GENERAL DETAILS


Leader of the PRD fraction in the senate

P PM T PB



T: Technical Energy

Expert

PB: Pro-Business

273

Energy Commission

274

Senate Energy Commission

PRESIDENT – Francisco Labastida Ochoa (PRI)

Secretaries

Other Members

• Fernando Elizondo Barragan (PAN)

• Juan Bueno Torio (PAN)

• Augusto Cesar Leal Angulo (PAN)

• Gustavo Enrique Madero Muñoz (PAN)

• Jorge Andrés Ocejo Moreno (PAN)

Ruben Camarillo Ortega (PAN) Graco L. Ramirez Garrido (PRD)

• Raúl Jose Mejia González (PRI)

• Carlos Lozado de la Torre (PRI)

• Rogelio Humberto Rueda (PRI)

• Arturo Nuñez Jimenez (PRD)

• Pablo Gomez y Alvarez (PRD)

• Arturo Escobar y Vega (PVEM)

• Dante Delgado Rannauro (Convergencia)

275

Senate Energy Commission Integration

6 members (40.0%)

PAN

PRD

PRI

PVEM

Convergencia

3 members (20.0%)

1 member (6.7%)

4 members (26.7%)

1 member (6.7%)

276

Labastida has worked in the public sector for over 37 years. He has experience in the energy sector

and has taken a leading role as Senate Energy Commission President in moving hydrocarbons reform

forward. He views his position as central to all discussions on energy reform. Since having lost the

2000 presidential elections, his political clout has waned. Labastida appears to see energy reform as a

means of regaining lost political muscle and influence.

President – Francisco Labastida Ochoa

GENERAL DETAILS


State: Sinaloa

BACKGROUND


Postgraduate studies in Project

Evaluation in MexicoOTHER POSITIONS

2000: Ran as the PRI presidential candidate

1998 – 1999: Served as Minister of the Interior

1995 – 1998: Served as Secretary of Agriculture, Livestock and Fishing

1987–1992: Governor of the state of Sinaloa

1982–1986: Secretary of Energy and Mines under the Miguel de la

Madrid administration

P PM T PB

Profile: P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Level of Interest

Po

we

r

-

Manage

closely

Reactive Active

277

Secretary – Ruben Camarillo Ortega

GENERAL DETAILS


State: Aguascalientes

BACKGROUND

Chemical/Industrial Engineer (Instituto Tecnologico de Agusacalientes)

Postgraduate studies in Oil and Petrochemical Technologies (Instituto Tecnologico

de la Ciudad de Madero)

OTHER POSITIONS

Founder and member of the Aguascalientes Industrial Engineers Association

Local Advisor of COPARMEX (Confederacion Patronal de la República Mexicana)

Coordinator of the New Products Investment at the IMP (Instituto Mexicano del

Petroleo)

2004 – 2007: PAN National Advisor (Consejero Nacional)

2004 – 2006: Local Deputy in Aguascalientes

1998-2004: Secretary of Economic Development in Aguascalientes

Mr. Ortega’s technical background will help him in

understanding technical issues within the commission. As a

PAN member, we expect him to be in favor of energy reforms.

As a businessman, his interest will be on the economic impact

energy reform could have.

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Profile:

Level of InterestP

ow

er

-

Manage

closely

Reactive Active

278

Secretary – Graco L. Ramirez Garrido

GENERAL DETAILS

Political Party: PRD (he was a member of the PRI until 1975, when he was

expelled due to allegedly misusing PRI funds to support opposition

candidates in the state of Tabasco)

State: Morelos

BACKGROUND

Degree in Laws from UNAM

OTHER POSITIONS

1985 – 1988: Federal Deputy for Morelos

1979 – 1982: Federal Deputy for Morelos

1975: Mr. Ramirez is expelled from the PRI due to allegedly misusing PRI

funds to support opposition candidates in the state of Tabasco

Mr. Ramirez is an opportunistic politician. He has no experience

in the energy sector. We do not expect to see him favoring any

type of reform in the sector.

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Profile:

Level of InterestP

ow

er

-

Manage

closely

Reactive Active

279

Member – Pablo Gomez y Alvarez

GENERAL DETAILS

Political Party: PRD (former priista)


BACKGROUND

Law Degree from UNAM

He is one of the founding members of the PRD and was the party’s interim president in 1999

In 2000 he ran for the PRD candidacy for Mayor of Mexico City. He lost the party nomination to

Lopez Obrador

2003-2006: He was federal deputy and coordinator of the PRD faction in the LIX Legislature

2000 – 2003: He was the PRD representative before the IFE

OTHER POSITIONS

Mr. Gomez is a true left hardliner. He is an experienced legislator and will be one of the

strongest opponents to opening up the energy sector.



T: Technical Energy

Expert

PB: Pro-Business

Profile:

Federal deputy in the LI Legislature (1979-1982); in the LVII Legislature (1997-

2000); local deputy in the Mexico City assembly from 1992 to 1995

Level of Interest

Po

we

r

-

Manage

closely

Reactive Active

280

Member – Juan Bueno Torio

GENERAL DETAILS


State: Veracruz

BACKGROUND

Business Administration degree from UNAM

1995 – 1996: President of the Municipal Committee of Cordoba,


2001 – 2003: Undersecretary for the small and medium companies in

the Secretary of Economy

2001- 2007: PAN National Advisor

2003 – 2006: General Director of Pemex Refining

OTHER POSITIONS

Bueno Torio has limited experience in the sector. He has interests in

several gas-stations in the state of Veracruz. He will favor reforms if he

perceives a personal benefit can derive from it. He has been involved

in several corruption scandals.

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Profile:

-

Manage

closelyActive

Level of Interest

Po

we

r

Reactive

281

Member – Dante Delgado Rannauro

In 1999 he created Convergencia. In 2004, under a PRD-Convergencia coalition, he competed for

the Veracruz governorship, which he lost to current Governor Fidel Herrera.

1988-1992: Interim Veracruz governor (when then Governor Fernando Gutierrez Barrios resigned

to become the Secretary of the Interior under President Salinas.)


1980-1986: Veracruz Undersecretary of Government

GENERAL DETAILS

Political Party: Convergencia (former priista)

State: Veracruz

President of the Convergencia fraction in the senate

BACKGROUND

Law Degree from Veracruz University

Masters in Law from University of New YorkOTHER POSITIONS

Delgado believes in a nationalistic, closed economy with a heavy State

role at all levels. As such, we expect that Delgado will continue to

share an allegiance with PRD hardliners and some members of the

PRI, opposing reforms in the sector. Because of his extreme stance, he

appears to be losing relevance within his own party.



T: Technical Energy

Expert

PB: Pro-Business

Profile:

-

Manage

closely

Level of Interest

Po

we

r

ActiveReactive

282

Member – Fernando Elizondo Barragan

GENERAL DETAILS


State: Nuevo Leon

BACKGROUND

Law degree from Nuevo Leon University

Masters degree in Business Administration from ITESM

Masters degree in Comparative Jurisprudence from New York University

Coordinator of the following business organizations:

Cámara Nacional de Comercio de Monterrey (CANACO),

Cámara de la Industria de la Transformación de Nuevo León (CAINTRA)

Confederación Patronal de la República Mexicana (COPARMEX)

OTHER POSITIONS

2004 – 2005: Secretary of Energy

2003: Substitute Nuevo Leon Governor (replacing Fernando Canales)

Mr. Elizondo will favor reforms in the sector but he will

continue lobbying in favor of the Monterrey industrial

base. He is also member of the Hacienda commission.



T: Technical Energy

Expert

PB: Pro-Business

Profile:

-

Manage

closely

Level of Interest

Po

we

r

ActiveReactive

283

Constitutional Affairs Commission

284

President - Pedro Joaquin Coldwell

GENERAL DETAILS


State: Quintana Roo

BACKGROUND

Degree in Law from Universaidad Iberoamericana

OTHER POSITIONS

1998: Ambassador of Mexico in Cuba

1988-1994: Secretary of Tourism during Carlos Salinas de Gortari administration

1981 – 1987: Governor of the state of Quintana Roo

Coldwell was the Peace and Reconciliation Commissioner in Chiapas

Director General of the Fondo Nacional para el Desarrollo Turístico (FONATUR)

He is an experienced politician. As president of

the Constitutional Affairs Committee he would be

involved in any constitutional reforms

undertaken. We do not expect him to oppose

reforms in the energy sector. He is perceived as

a moderate priista, open to negotiate. He is

perceived as a conciliator.

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Profile:

285

Secretary - José Alejandro Zapata Perogordo

GENERAL DETAILS


State: San Luís Potosí

BACKGROUND

Degree in Law from the Universidad Autónoma de San Luis Potosí

OTHER POSITIONS

2000-2003: Federal deputy. In 2003 he was leader of the PAN fraction in

the Lower House

1997-2000: Major of the city of San Luís Potosí


P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Profile:

Zapata Perogordo is a traditional panista. He is perceived to be

close to Felipe Calderon; the two go back to when they served

together as Lower House deputies in 1994. We expect him to

vote along party lines.

286

Secretary – Arturo Nuñez Jimenez

GENERAL DETAILS

Political Party: PRD (former priista)

State: Tabasco

BACKGROUND


Undersecretary of Interior during President Zedillo administration (1994 – 2000)

1997 - 2000: Federal deputy and PRI coordinator for the Lower House

PRI member until the year 2000, when he allied with Lopez Obrador and entered

the PRD

In 2000 Mr. Nuñez tried running for the PRI candidacy for the Tabasco

governorship. He lost the internal election to Manuel Andrade, Roberto Madrazo’s

candidate, and resigned from the party

OTHER POSITIONS

Mr. Nuñez is considered to be one of the

closest allies to Andres Manuel Lopez

Obrador. We expect him to be one of the

strongest opponents to reforms in the energy

sector.

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Profile:

287

Member - Eloy Cantu

GENERAL DETAILS


State: Nuevo León

BACKGROUND

Degree in Law from the University of Monterrey

Degree in Economics from Instituto Tecnológico de Estudios

Superiores de Monterrey

Master in Public Administration from the International Public

Administration Institute of Paris

PhD. in Constitutional Law form University of Paris II, Panthéon-Assas

(La Sorbona)OTHER POSITIONS

2003-2006: Secretary of Economic Development of Nuevo Leon


1994-2000: Senator


Mr. Cantu has vast legislative experience and is considered to

be a very progressive politician. He is very close to the

Monterrey Governor, José Natividad González Parás and also

to the Monterrey industrial base. He will act on behalf of his

constituencies.P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Profile:

http://www.senado.gob.mx/legislatura.php?id=68

288

Finance Commission

289

President - Gustavo Enrique Madero

GENERAL DETAILS


State: Chihuahua

BACKGROUND

Degree in Communications from the Instituto Tecnológico y de Estudios

Superiores de Occidente

OTHER POSITIONS


2001: Candidate for the Municipal Presidency of Chihuahua

President of the Economic Development Council of the state of

Chihuahua

Vice-president of the Chihuahua Businessmen Center

Secretary of Evaluation and Planning of the state of Chihuahua

Mr. Madero will play an important role in any fiscal

reform negotiations as President of the Finance

Commission. He is also member of the energy

commission and although he has no experience in

the sector, he is likely to favor energy reform.

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Profile:


290

Member - Maria de los Angeles Moreno

GENERAL DETAILS


BACKGROUND


Graduate studies in Socioeconomic planning from the Institute of Social

Studies, Netherlands University Foundation for International Cooperation

OTHER POSITIONS

1994 – 2000: Held a Senate position. In 1997 she served as Senate

President and in 1999 she was President of the Senate Permanent

Commission

1988-1991: Secretary of Fisheries under President Carlos Salinas administration

1982 – 1988: Undersecretary of Finance (Subsecrtaria de Programación y Presuesto)

Ms. Moreno was the first woman to preside over

the PRI back in 1994. She is considered to be an

experienced politician and a good negotiator

and technical operator. She has substantial

legislative experience having served as a

senator and also as a deputy in the Mexico City

legislature.

P PM T PB

P= Politician


T: Technical Energy

Expert

PB: Pro-Business

Profile:


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