Mexico energy watch: Jan-Nov oil exports, energy policy impact on FDI

Mexican crude oil exports fell 12.7% month-on-month in November, according to figures from national oil company Pemex.

The NOC exported 894,000b/d in the month and the average for January-November was 958,000b/d, driven by high international oil prices. 

Mexico has been gradually reducing its exports since 2018, when the country exported an average of 1.18Mb/d. 

President Andrés Manuel López Obrador has often touted the government's goal of ending oil exports by the end of his term in 2024. The goal hinges on having enough refining capacity at Pemex to process all the locally extracted crude, which requires a fully operational Olmeca refinery, the overhaul of its existing refineries, and the Deer Park refinery in Texas, which Pemex bought from Shell in 2021.

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Energy sector policy remains among the chief concerns of foreign investors when assessing investing in Mexico, according to Citibanamex.

A lack of reliable energy supply, together with insecurity and lack of infrastructure, is among the contributing factors slowing down nearshoring opportunities in the Mexican economy, the bank said in a report. 

A loss of manufacturing market participation in Europe and China over the past four years has largely gone to India, Vietnam, Taiwan and Thailand, it said.

With the effects of nearshoring opportunities so far failing to materialize on a large scale, Mexico’s economic performance in 2023 and 2024 will likely be dragged down by high interest rates and sluggish growth internationally, according to the bank.

An energy sector perceived as hostile to foreign investors and Mexico’s ongoing USMCA dispute with the US and Canada, are also among the factors that could hinder growth, it added.