The North American shale gas revolution, currently confined to the US and Canada, could soon spread south to Mexico. Political decisions awaiting incoming President Enrique Peña Nieto will shape the timeline for the development of domestic shale resources. This timeline will in turn have ramifications on energy markets in the US, as well as the rest of the world. If Peña Nieto successfully opens the sector to private investment, US and Canadian firms with expertise in exploiting shale oil and gas will rush into Mexico. Nevertheless, regardless of the trajectory of its shale gas sector, Mexican imports of US shale gas will rise in the immediate future.

Peña Nieto appears set to initiate a needed discussion about Mexico’s energy future by pressing for a second energy reform in less than five years. But to develop indigenous shale resources at a speed that matches Mexico’s needs, the government recognizes that it must open up the domestic upstream sector to private sector participants with technological and operational expertise. And to lure companies with this kind of knowledge, Peña Nieto must propose a constitutional reform to allow state-owned energy company Pemex to form partnerships with private firms, which his administration intends to do as early as February.

via Guest post: Mexico – the North American shale revolution heads south | beyondbrics.