Mexico’s state-owned oil company PEMEX has announced that it will invest nearly $28 billion in 2014, a historic figure that marks the largest annual investment in the firm’s history. The majority of the new investment money will reportedly be used to expand exploration and production of crude oil and gas.
“PEMEX invested $26 billion last year and expects that to rise to $27.7 billion this year then to $31.3 billion in 2018,” writes the Financial Times.
According to PEMEX CEO Emilio Lozoya, however, the nation’s energy sector will ultimately require upwards of $60 billion a year in new investments to develop its maximum resource potential. Mexico is already the world’s seventh-largest crude producer, but a wide variety of new opportunities are expected to open up in the wake of the historic energy reforms passed by congress in late 2013.
“International oil majors are expected to be keen to enter Mexico’s offshore, deepwater exploration, as well as to develop shale prospects,” writes the Financial Times.
Finer details will be decided in the coming weeks as congress moves to finalize secondary portions of the reform legislation, outlining which fields will be opened up first to outside partnerships. By 2018 hopes to produce upwards of 3 million barrels of oil daily, which will be a significant increase from its 2.5 million average in 2013.
Of the landmark capital expenditure that is planned for this year, PEMEX reportedly plans to spend $23.4 billion in exploration and production, with around $3.2 billion allocated for refining. Since PEMEX has little experience with deepwater drilling, it is expected to seek outside help in this area while retaining access to many of Mexico’s shallow-water fields.
As a result, the global oil industry is watching Mexico more closely than ever, and the nation’s government is working hard to finalize deals with foreign companies. The reforms are also expected to reduce energy costs while jumpstarting production and boosting Mexico’s already booming manufacturing and industrial sectors. Although details about the pending secondary legislation are not likely to be released prior to April 20, PEMEX has already made it abundantly clear that it will work with foreign companies to exploit deep offshore and tight shale fields.
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