Representative office in Mexico City

Mr Wegenast, you have been living in Mexico for 20 years where you have personally experienced the effects of NAFTA since its launch in 1994. What effects has the North American Free Trade Agreement had thus far on Mexico?

NAFTA has had quite an extensive impact on Mexico. The volume of trade in the free trade area has increased considerably and a number of US but also European and Asian companies have set up or expanded production sites in the country. This is especially apparent when you look at the capacity buildup going on in the industrial metropolis Monterrey in northern Mexico. Here NAFTA brought about financings worth several billions backed by Hermes to expand the national and international production capacity in Mexico. Thousands of new jobs were created there and elsewhere. This is especially noticeable in the field of automobile construction and also in the so-called maquiladora industry, where in particular electronic appliances such as televisions etc. are assembled in Mexico under particularly favourable tax conditions.

The monopoly of the state-owned petroleum company Pemex ended after 75 years - since 2015 foreign businesses have been allowed to invest directly in oil and gas production. What opportunities do you see for German and European exporters once the Mexican energy market has opened up?

What is important is how exactly the reforms will be implemented. It depends heavily on how transparent and impartially this process is seen as taking place. If all goes well, Mexico will see substantial investment, beginning in exploration followed by the petrochemical and other industries. In exploration German companies will play a role mainly as - or even as key - suppliers whereas in downstream industries their role will change to that of sponsors.

Solar, wind and hydro - what role do renewable energies play in oil-producing Mexico?

The opportunities for hydropower are naturally limited. However, some large-scale projects have been carried out in recent years, e.g. "El Cajon" and "La Yesca".

There are a good many wind energy success stories in Mexico, and not least because Mexico has some of the best wind locations worldwide. The wind that blows in Isthmo de Tehuantepec, the narrowest strip of land in the country, is almost frightening. One must experience it for oneself. First-class locations can also be found in the north, in the states of Tamaulipas and Nuevo Leon. Most of these projects were realised on a PPA basis (Power Purchase Agreement), in other words, with the support of long-term off-take agreements with industrial companies.

Solar energy is still expanding at a very sluggish pace. One must take into account here the absence of subsidies for wind or solar energy in Mexico. However, things are moving thanks to the location advantages. The investment costs for solar energy have fallen sharply in recent years and are expected to do so in the future too. I believe we are about to see the first private and commercial projects.