Mexico's oil, gas industry moves center stage

Monday, November 3, 2014

Mexico's energy reforms have thrust the country's oil and gas industry into the limelight – making it a regional and global center of attention.

Mexico is home to the world's fourth-largest shale gas reserves and 112Bboe in prospective reserves, and the reforms are set to reverse a long-term decline in output, according to the latest BNamericas Intelligence Series Outlook.

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"Mexico is absolutely the story everyone has been waiting for in Latin America," Travis Pace, a director at the Galway Group, said in the report.

"It is going to be difficult, but just the fact that the government and the population have decided to open the energy sector is massive, and it is going to be so good for the country and for the world energy markets," he added.

The first phase of round one, in which the oil and gas fields not awarded to state-owned Pemex in this year's round zero will be put out to tender, will include 60 production areas and 109 exploration areas, including mature fields, extra heavy crude and deepwater projects.

Pemex predicts first-round investment to be US$12.6bn, an amount it expects to see repeated annually until 2018 as the second and third rounds of tenders take place.

The acreage awarded to Pemex in round zero totaled 90,000km2, with production potential of 20.6Bb, an output that, according to the firm's CEO Emilio Lozoya Austin, "guarantees the firm's short- and medium-term viability and sets the bases for its expansion."

Pemex already has 22 oil blocks in production in partnership with the private sector, and for which new contracts will be drawn up between this year and next, while the firm is expected to announce new joint ventures in 2015, having signed cooperation agreements in recent weeks with a slew of international firms.

These include BHP Billiton, Chevron, Eni, Exxon Mobil, ONGC, YPF and Kuwait Foreign Petroleum Exploration Company.

Though Mexico was unable to profit from the period of high oil prices, it looks set to follow the example of its northern neighbor and become a major hydrocarbons producer in the next decade, the report said.

Pemex expects to boost output 500,000b/d to around 2.84Mb/d by 2018, while the EIA expects the country's oil output to reach 3.7Mb/d by 2040.

You can read the full report, which offers in-depth analysis of all of Latin America's oil and gas markets, here.

BNamericas will host its 11th Southern Cone Energy Summit in Lima, Peru, on November 12-13. Click here to download the agenda.