Until 2014, Mexico's energy sectors (oil and gas, and electricity) were state-owned and did not permit foreign investment. Since then, however, major reforms have opened up the energy market, which is expected to offer new opportunities to Canadian companies. Essentially, these reforms will end the former monopolies held by PEMEX and CFE in their respective markets.

While the two agencies will still be government owned, they will function as independent, for-profit enterprises that can enter into contracts with private sector entities. PEMEX, for example, is setting up a new centralized Office of Corporate Procurement (Dirección Corporativa de Procura y Abastecimiento, or DCPA) to handle purchases of goods and services. CFE procurement will also be affected by the reforms, although the exact nature of the process is still evolving. These changes should create new competitive markets by sharply increasing the flow of private investment and technology into Mexico's oil, gas and electricity industries.

PEMEX, for its part, relies heavily on imported products and services, and the reforms will allow the private sector to participate more extensively in exploration, drilling, production and refining. The company, which will continue to invest in deepwater development and in improving extraction from onshore fields, has identified 10 projects that it wants to develop with private firms. These projects would be located in the Ayatsil, Tekel and Utsil oil fields, the Lakach gas fields and the deepwater fields in the Perdido region.1 PEMEX's capital expenditures budget for 2014 is USD 28 billion, which is expected to increase by four per cent annually from 2014 to 2018. It is worth noting that, during the past five years, EDC has provided more than CAD 1.5 billion in support for Canadian companies active in Mexico's oil and gas sector.

CFE intends to diversify power generation by using more combined-cycle equipment, modernizing outdated electricity plants and switching to natural gas for power generation. In 2014, as part of this initiative, CFE announced a bidding process for 16 gas and electricity infrastructure projects worth about USD 4.9 billion. The projects include three new power plants: the 683 MW Guaymas plant in Sonora, the 786 MW Topolobampo plant in Sinaloa, and the 889 MW Noreste plant in Nuevo Leon. Also included are four gas pipelines, three power transmission lines, the updating of a hydroelectric plant and five projects for modernizing the electricity distribution grid.