Partner Juan Carlos Boué publishes article entitled ‘At any price? Political priorities and economic returns in Mexican oil auctions (2014-2017)’

Curtis partner Juan Carlos Boué has published an article entitled ‘At any price? Political priorities and economic returns in Mexican oil auctions (2014-2017)’. The article discusses the effect of Mexico’s oil sector liberalization, ten years on.

The liberalization of Mexico’s oil sector was the most significant policy change in decades, yet few studies have systematically evaluated its achievements against its promises.

This article by Mr. Boué, examines how the structure of the bidding rounds for petroleum licenses and contracts (2014- 2017) affected the economic returns on the policy. It explains:

• How an overarching political objective to “lock in” the reforms and prevent their reversal, prevailed over rational economics – the reforms were designed to open up the sector fully and at speed, despite an adverse international oil price environment;
• How the chosen auction methodology reduced the potential economic returns of sector liberalization to the State (ceiling values on both the additional royalties and the profit-sharing percentages that could be offered, as well as self-imposed restrictions regarding the collection of cash bonuses); and
• Why public revenues generated in the oil auctions were significantly lower than those recorded in other countries over the same period.

The full article is available in English and Spanish here.