Can shale gas development in Mexico be smart regulated? A qualitative analysis of the regulatory setting, challenges and perspectives

This article examines shale gas development in Mexico. Its qualitative analysis focuses on the regulatory setting, challenges and perspectives, and on the feasibility to 'smartly regulate' this issue. The analysis demonstrates that Mexico's shale gas development is especially difficult to regulate due to its high complexity. Increasing environmental impacts, lack of regulatory and industry expertise and a novel regulatory setting with multiple regulators and levels of accountability increase the regulatory challenge. Innovative and complementary regulatory tools, best practice and specialised regulation are likely to lessen the environmental impacts associated with shale gas development and regulators have already made significant progress in this direction. The first competitive bidding for unconventional terrestrial resources was announced in March 2018 and is the tip of the iceberg of commercial production of Mexico´s vast shale gas resources. Nevertheless, the particular complexity of regulating shale gas development in Mexico, suggests that even if 'smart regulation' is possible and is properly implemented substantial adverse environmental impacts may still occur.