The chief economist for BBVA Compass, Nathaniel Karp, testified at a Texas Senate natural resources subcommittee on Sept. 19 about Mexico’s energy reforms, the bank said Sept. 22.
The historic reforms will add more than 200,000 jobs, roughly $3.5 billion in state revenues and $45 billion in state GDP, Karp said.
Texas Sen. Juan Hinojosa of McAllen invited Karp to speak. Hinojosa is the natural resource subcommittee’s chairman, the bank added.
Karp discussed research that a BBVA Compass team, which he leads, conducted on the reforms’ economic impact on Texas, the bank said, noting that the reforms, passed in December, allow private investment in Mexico’s energy sector.
The BBVA Compass research team analyzes the U.S. economy, banking and monetary policy, the bank added.
"Texas stands to be the major beneficiary from the reform due to deep economic ties, geographic proximity and expertise in energy exploration, production and distribution," Karp told the subcommittee, adding that Mexico "will need Texas' firms to provide physical resources, cutting-edge technologies, human capital and expertise," particularly in deepwater and horizontal drilling and extra-heavy oil.
Karp anticipated that much direct foreign investment will be used to purchase goods and services from Texas, and that further trade between Texas and Mexico will result from the faster economic growth in Mexico.
The two largest of the five “promising” Mexican basins are on or near the Texas border, Karp said. The Burgos Basin, in northeast Mexico, could hold two-thirds of the country’s shale gas and is an extension of the Eagle Ford Shale. The “socioeconomic disparities between Texas’ border cities and big metro areas” could be lessened through operations on the Texas side of the border, he said.
BBVA Compass is a subsidiary of BBVA Compass Bancshares Inc., a subsidiary of BBVA (NYSE: BBVA).
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