Deloitte survey sees near term opportunity in Mexico's energy reform

Tuesday, November 18, 2014

Mexico's energy reforms will benefit global oil giants and large independent firms, as well as strengthen North America's energy self-sufficiency and competitiveness, according to a Deloitte industry survey.

The consultancy's 2014 Oil and Gas Survey says that while there are huge long term E&P opportunities in the Mexican oil and gas sector, the needed expansion of the country's midstream infrastructure represents a good opportunity in the near term.

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Two-thirds of the 250 oil and gas professionals polled in October believe that the liberalization of Mexico's oil and gas industry is at least somewhat critical to help North America achieving energy independence.

"US natural gas production for the electrification of half of Mexico, which right now relies on oil-based products, is another area of strategic consideration," said Jorge Castilla, a partner at Deloitte Consulting Mexico, in a release. "From a capital spending and environmental perspective, this demand-side opportunity is arguably as large, or even larger, than the upstream potential."

A significant focus of Mexico's energy reforms is the conversion of its oil-fired power stations to natural gas by building 22 pipelines over the next 15 years.

The pipeline expansion strategy will help to avoid natural gas supply shortages, state utility CFE said earlier this month.

The pipeline network is due to grow around 34% over the next two years, CFE chief executive Enrique Ochoa Reza said, with five planned lines set to import natural gas from Texas that will further expand the network 12%.