Some people seem to lose sight of the purpose behind the energy reform, even though it is spelled out explicitly in the constitutional amendments.
The purpose is not to generate more jobs in the energy industry. It almost certainly succeed in doing that, but the number of jobs so generated is unlikely to make a huge difference to the employment prospects of most Mexicans. Energy is too capital-intensive and Mexico is too large.
Nor is the purpose to lower natural gas prices in Mexico. Natural gas prices will eventually fall in Mexico, but because of pipeline connections to the United States, not the upstream energy reforms.
Finally, the purpose is not to produce more oil! Some recent commentary appears to forget this point.
The purpose is to maximize revenue for the Mexican federal government. That may involve maximizing production or it may involve tightly rationing license rounds and writing in high royalty rates after cost recovery. (It depends on exploration risk.) I suspect the latter ... and that is the direction in which I would err were I a Mexican policymaker.
NAFTA’s investment protections will make it very difficult for a future government to dramatically alter the terms of the initial conces ... er, licenses. Better a botched initial round, I would think. No?
Energy reform will boost production in two ways: first, it will allow more capital to flow into the industry (Pemex is liquidity-constrained); and second, it will put Pemex under competitive pressure (although I have my doubts that this will accomplish much). But the point is not to boost production for its own sake; the point is to maximize government revenue. Some opportunities will almost certainly be left on the table ... and should be.
Don’t forget the point.