Regulatory Reform in Mexico's Natural Gas Industry : Liberalization in the Context of a Dominant Upstream Incumbent
The 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-p...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2001/01/891732/regulatory-reform-mexicos-natural-gas-industry-liberalization-context-dominant-upstream-incumbent http://hdl.handle.net/10986/19726 |
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okr-10986-19726 |
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| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
AIR POLLUTION ASYMMETRY OF INFORMATION COGENERATION CONSTRUCTION CRUDE OIL DIESEL DISTRIBUTION COMPANY DOMESTIC FUEL ELECTRICITY ELECTRICITY DEMAND ELECTRICITY GENERATION ELECTRICITY INDUSTRY ELECTRICITY SECTOR EMISSION END-USERS ENERGY RESOURCES ENVIRONMENTAL REGULATIONS EXTRACTION FUEL FUEL OIL FUEL PRICES FUELS GAS GAS BILLS GAS COMPANIES GAS DISTRIBUTION GAS EXPLORATION GAS EXTRACTION GAS FIELD GAS IMPORTS GAS INDUSTRIES GAS INDUSTRY GAS LAW GAS MARKET GAS MARKETING GAS MARKETS GAS POLICY GAS PRICE GAS PRICES GAS PRICING GAS PRODUCTION GAS REGULATIONS GAS RESERVES GAS STORAGE GAS SUPPLY GAS TRADE GAS TRADING GAS TRANSPORTATION HYDROCARBONS INTERNATIONAL ENERGY AGENCY LIQUEFIED PETROLEUM GAS NATURAL GAS NATURAL GAS DEVELOPMENT NATURAL GAS DISTRIBUTION NATURAL GAS EXTRACTION NATURAL GAS INDUSTRY NATURAL GAS MARKETS NATURAL GAS PRICES NATURAL GAS PRICING NATURAL GAS RESERVES NATURAL GAS SECTOR NATURAL GAS STORAGE NATURAL GAS SUPPLY NATURAL RESOURCES OIL OIL AND GAS OIL AND GAS SECTOR OIL EXTRACTION OIL PRODUCTION PARTICULATE EMISSIONS PETROCHEMICALS PETROLEUM PETROLEUM GAS PIPELINE PIPELINE NETWORK PIPELINE SYSTEM PIPELINE TRANSPORT PIPELINE TRANSPORTATION PIPELINES POLLUTION POPULATION DENSITY POWER GENERATION PRICE VOLATILITY REFINING SECONDARY MARKETS TRANSPORT COSTS TRANSPORTATION SYSTEM |
| spellingShingle |
AIR POLLUTION ASYMMETRY OF INFORMATION COGENERATION CONSTRUCTION CRUDE OIL DIESEL DISTRIBUTION COMPANY DOMESTIC FUEL ELECTRICITY ELECTRICITY DEMAND ELECTRICITY GENERATION ELECTRICITY INDUSTRY ELECTRICITY SECTOR EMISSION END-USERS ENERGY RESOURCES ENVIRONMENTAL REGULATIONS EXTRACTION FUEL FUEL OIL FUEL PRICES FUELS GAS GAS BILLS GAS COMPANIES GAS DISTRIBUTION GAS EXPLORATION GAS EXTRACTION GAS FIELD GAS IMPORTS GAS INDUSTRIES GAS INDUSTRY GAS LAW GAS MARKET GAS MARKETING GAS MARKETS GAS POLICY GAS PRICE GAS PRICES GAS PRICING GAS PRODUCTION GAS REGULATIONS GAS RESERVES GAS STORAGE GAS SUPPLY GAS TRADE GAS TRADING GAS TRANSPORTATION HYDROCARBONS INTERNATIONAL ENERGY AGENCY LIQUEFIED PETROLEUM GAS NATURAL GAS NATURAL GAS DEVELOPMENT NATURAL GAS DISTRIBUTION NATURAL GAS EXTRACTION NATURAL GAS INDUSTRY NATURAL GAS MARKETS NATURAL GAS PRICES NATURAL GAS PRICING NATURAL GAS RESERVES NATURAL GAS SECTOR NATURAL GAS STORAGE NATURAL GAS SUPPLY NATURAL RESOURCES OIL OIL AND GAS OIL AND GAS SECTOR OIL EXTRACTION OIL PRODUCTION PARTICULATE EMISSIONS PETROCHEMICALS PETROLEUM PETROLEUM GAS PIPELINE PIPELINE NETWORK PIPELINE SYSTEM PIPELINE TRANSPORT PIPELINE TRANSPORTATION PIPELINES POLLUTION POPULATION DENSITY POWER GENERATION PRICE VOLATILITY REFINING SECONDARY MARKETS TRANSPORT COSTS TRANSPORTATION SYSTEM Rosellon, Juan Halpern, Jonathan Regulatory Reform in Mexico's Natural Gas Industry : Liberalization in the Context of a Dominant Upstream Incumbent |
| geographic_facet |
Latin America & Caribbean Mexico |
| relation |
Policy Research Working Paper;No. 2537 |
| description |
The 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. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Rosellon, Juan Halpern, Jonathan |
| author_facet |
Rosellon, Juan Halpern, Jonathan |
| author_sort |
Rosellon, Juan |
| title |
Regulatory Reform in Mexico's Natural Gas Industry : Liberalization in the Context of a Dominant Upstream Incumbent |
| title_short |
Regulatory Reform in Mexico's Natural Gas Industry : Liberalization in the Context of a Dominant Upstream Incumbent |
| title_full |
Regulatory Reform in Mexico's Natural Gas Industry : Liberalization in the Context of a Dominant Upstream Incumbent |
| title_fullStr |
Regulatory Reform in Mexico's Natural Gas Industry : Liberalization in the Context of a Dominant Upstream Incumbent |
| title_full_unstemmed |
Regulatory Reform in Mexico's Natural Gas Industry : Liberalization in the Context of a Dominant Upstream Incumbent |
| title_sort |
regulatory reform in mexico's natural gas industry : liberalization in the context of a dominant upstream incumbent |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2001/01/891732/regulatory-reform-mexicos-natural-gas-industry-liberalization-context-dominant-upstream-incumbent http://hdl.handle.net/10986/19726 |
| _version_ |
1764440450516647936 |
| spelling |
okr-10986-197262021-04-23T14:03:44Z Regulatory Reform in Mexico's Natural Gas Industry : Liberalization in the Context of a Dominant Upstream Incumbent Rosellon, Juan Halpern, Jonathan AIR POLLUTION ASYMMETRY OF INFORMATION COGENERATION CONSTRUCTION CRUDE OIL DIESEL DISTRIBUTION COMPANY DOMESTIC FUEL ELECTRICITY ELECTRICITY DEMAND ELECTRICITY GENERATION ELECTRICITY INDUSTRY ELECTRICITY SECTOR EMISSION END-USERS ENERGY RESOURCES ENVIRONMENTAL REGULATIONS EXTRACTION FUEL FUEL OIL FUEL PRICES FUELS GAS GAS BILLS GAS COMPANIES GAS DISTRIBUTION GAS EXPLORATION GAS EXTRACTION GAS FIELD GAS IMPORTS GAS INDUSTRIES GAS INDUSTRY GAS LAW GAS MARKET GAS MARKETING GAS MARKETS GAS POLICY GAS PRICE GAS PRICES GAS PRICING GAS PRODUCTION GAS REGULATIONS GAS RESERVES GAS STORAGE GAS SUPPLY GAS TRADE GAS TRADING GAS TRANSPORTATION HYDROCARBONS INTERNATIONAL ENERGY AGENCY LIQUEFIED PETROLEUM GAS NATURAL GAS NATURAL GAS DEVELOPMENT NATURAL GAS DISTRIBUTION NATURAL GAS EXTRACTION NATURAL GAS INDUSTRY NATURAL GAS MARKETS NATURAL GAS PRICES NATURAL GAS PRICING NATURAL GAS RESERVES NATURAL GAS SECTOR NATURAL GAS STORAGE NATURAL GAS SUPPLY NATURAL RESOURCES OIL OIL AND GAS OIL AND GAS SECTOR OIL EXTRACTION OIL PRODUCTION PARTICULATE EMISSIONS PETROCHEMICALS PETROLEUM PETROLEUM GAS PIPELINE PIPELINE NETWORK PIPELINE SYSTEM PIPELINE TRANSPORT PIPELINE TRANSPORTATION PIPELINES POLLUTION POPULATION DENSITY POWER GENERATION PRICE VOLATILITY REFINING SECONDARY MARKETS TRANSPORT COSTS TRANSPORTATION SYSTEM The 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. 2014-08-26T20:35:38Z 2014-08-26T20:35:38Z 2001-01 http://documents.worldbank.org/curated/en/2001/01/891732/regulatory-reform-mexicos-natural-gas-industry-liberalization-context-dominant-upstream-incumbent http://hdl.handle.net/10986/19726 English en_US Policy Research Working Paper;No. 2537 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Latin America & Caribbean Mexico |