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Regulatory Reform in Mexico's Natural Gas Industry : Liberalization in the Context of a Dominant Upstream Incumbent

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dc.contributor.authorRosellon, Juan
dc.contributor.authorHalpern, Jonathan
dc.date.accessioned2014-08-26T20:35:38Z
dc.date.available2014-08-26T20:35:38Z
dc.date.issued2001-01
dc.description.abstractThe natural gas industry combines activities with natural monopoly characterisitics with those that are potentially competitive. Pipeline transport and distribution, which have natural monopoly characterisitcs, require regulation of price and non-price behavior. Production is a contestable activity, but in a few countries (including Mexico) it remains a state monopoly. Gas marketing is also contestable, but the presence of a dominant, upstream, vertically integrated incumbent may pose significant barriers to entry. Market architecture decisions--such as horizontal structure, regional development, and the degree of vertical integration--are also crucial. The authors report that Mexico has undertaken structural reform in the energy sector more slowly than many other countries, but it has introduced changes to attract private investment in natural gas transport and distribution. These changes were a response to the rapid growth in demand for natural gas (about 10 percent a year) in Mexico, which was in turn a response to economic development and the enforcement of environmental regulations. The new regulatory framework provides incentives for firms to invest and operate efficiently and to bear much much of the risk associated with new projects. It also protects captive consumers and improves general economic welfare. The continued vertical integration of the state-owned company Pemex and its statutory monopoly in domestic production posed a challenge to regulators. Their response in liberalizing trade, setting first-hand sales prices, and regulating natural gas distribution makes the Mexican case an interesting example of regulatory design. As the first phase of investment mobilization and competition for the market in Mexican distribution project concludes, remaining challenges include consistently and transparently enforcing regulations, coordinating tasks among government agencies, and ensuring expansion of gas transport services and domestic production. A key challenge in the near term will be fostering competition in the market. In strengthening the role of market forces, one issue is Pemex's discretionary discounts on domestic gas and access to transport services, made possible by its monopoly in domestic production and marketing activities and its overwhelming dominance in transport. The main instrument available to the regulator is proscribing Pemex contract pricing, but more durable and tractable instruments should be considered.en
dc.identifierhttp://documents.worldbank.org/curated/en/2001/01/891732/regulatory-reform-mexicos-natural-gas-industry-liberalization-context-dominant-upstream-incumbent
dc.identifier.doi10.1596/1813-9450-2537
dc.identifier.urihttps://hdl.handle.net/10986/19726
dc.languageEnglish
dc.language.isoen_US
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper;No. 2537
dc.rightsCC BY 3.0 IGO
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectAIR POLLUTION
dc.subjectASYMMETRY OF INFORMATION
dc.subjectCOGENERATION
dc.subjectCONSTRUCTION
dc.subjectCRUDE OIL
dc.subjectDIESEL
dc.subjectDISTRIBUTION COMPANY
dc.subjectDOMESTIC FUEL
dc.subjectELECTRICITY
dc.subjectELECTRICITY DEMAND
dc.subjectELECTRICITY GENERATION
dc.subjectELECTRICITY INDUSTRY
dc.subjectELECTRICITY SECTOR
dc.subjectEMISSION
dc.subjectEND-USERS
dc.subjectENERGY RESOURCES
dc.subjectENVIRONMENTAL REGULATIONS
dc.subjectEXTRACTION
dc.subjectFUEL
dc.subjectFUEL OIL
dc.subjectFUEL PRICES
dc.subjectFUELS
dc.subjectGAS
dc.subjectGAS BILLS
dc.subjectGAS COMPANIES
dc.subjectGAS DISTRIBUTION
dc.subjectGAS EXPLORATION
dc.subjectGAS EXTRACTION
dc.subjectGAS FIELD
dc.subjectGAS IMPORTS
dc.subjectGAS INDUSTRIES
dc.subjectGAS INDUSTRY
dc.subjectGAS LAW
dc.subjectGAS MARKET
dc.subjectGAS MARKETING
dc.subjectGAS MARKETS
dc.subjectGAS POLICY
dc.subjectGAS PRICE
dc.subjectGAS PRICES
dc.subjectGAS PRICING
dc.subjectGAS PRODUCTION
dc.subjectGAS REGULATIONS
dc.subjectGAS RESERVES
dc.subjectGAS STORAGE
dc.subjectGAS SUPPLY
dc.subjectGAS TRADE
dc.subjectGAS TRADING
dc.subjectGAS TRANSPORTATION
dc.subjectHYDROCARBONS
dc.subjectINTERNATIONAL ENERGY AGENCY
dc.subjectLIQUEFIED PETROLEUM GAS
dc.subjectNATURAL GAS
dc.subjectNATURAL GAS DEVELOPMENT
dc.subjectNATURAL GAS DISTRIBUTION
dc.subjectNATURAL GAS EXTRACTION
dc.subjectNATURAL GAS INDUSTRY
dc.subjectNATURAL GAS MARKETS
dc.subjectNATURAL GAS PRICES
dc.subjectNATURAL GAS PRICING
dc.subjectNATURAL GAS RESERVES
dc.subjectNATURAL GAS SECTOR
dc.subjectNATURAL GAS STORAGE
dc.subjectNATURAL GAS SUPPLY
dc.subjectNATURAL RESOURCES
dc.subjectOIL
dc.subjectOIL AND GAS
dc.subjectOIL AND GAS SECTOR
dc.subjectOIL EXTRACTION
dc.subjectOIL PRODUCTION
dc.subjectPARTICULATE EMISSIONS
dc.subjectPETROCHEMICALS
dc.subjectPETROLEUM
dc.subjectPETROLEUM GAS
dc.subjectPIPELINE
dc.subjectPIPELINE NETWORK
dc.subjectPIPELINE SYSTEM
dc.subjectPIPELINE TRANSPORT
dc.subjectPIPELINE TRANSPORTATION
dc.subjectPIPELINES
dc.subjectPOLLUTION
dc.subjectPOPULATION DENSITY
dc.subjectPOWER GENERATION
dc.subjectPRICE VOLATILITY
dc.subjectREFINING
dc.subjectSECONDARY MARKETS
dc.subjectTRANSPORT COSTS
dc.subjectTRANSPORTATION SYSTEM
dc.titleRegulatory Reform in Mexico's Natural Gas Industry : Liberalization in the Context of a Dominant Upstream Incumbenten
dspace.entity.typePublication
okr.crosscuttingsolutionareaClimate Change
okr.crossref.titleRegulatory Reform in Mexico’s Natural Gas Industry: Liberalization in the Context of a Dominant Upstream Incumbent
okr.date.doiregistration2025-04-10T09:23:31.961693Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/2001/01/891732/regulatory-reform-mexicos-natural-gas-industry-liberalization-context-dominant-upstream-incumbent
okr.globalpracticeEnvironment and Natural Resources
okr.globalpracticeWater
okr.globalpracticeEnergy and Extractives
okr.guid638201468056046545
okr.identifier.doi10.1596/1813-9450-2537
okr.identifier.externaldocumentum000094946_01021007442963
okr.identifier.internaldocumentum891732
okr.identifier.reportWPS2537
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2001/03/01/000094946_01021007442963/Rendered/PDF/multi_page.pdfen
okr.region.administrativeLatin America & Caribbean
okr.region.countryMexico
okr.sectorEnergy and mining :: Oil and gas
okr.topicEnergy::Energy and Environment
okr.topicEnvironment::Carbon Policy and Trading
okr.topicOil Refining and Gas Industry
okr.topicWater Resources::Water and Industry
okr.topicOil and Gas
okr.unitFinance, Private Sector, and Infrastructure Sector Unit, Latin America and the Caribbean Region
okr.volume1
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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