This August Mexican President Enrique Pena Nieto signed Mexico’s new energy reforms package into law, which ended a 76-year monopoly over the nation’s vast oil and gas resources by state-owned Petroleos Mexicanos (PEMEX). The move opens Mexico’s energy sector to private capital from both domestic and foreign sources, permitting global oil majors to operate here for the first time since energy assets were nationalized in 1938.
“PEMEX plans to partner with Exxon Mobil,Chevron,Shell,British Petroleum and Brazil’s Petrobras for deep water drilling,” reports the Saudi Gazette. “The policy shift could produce a bonanza of cheap oil and gas in the Americas.”
What does this mean in real numbers? Although it’s hard to say exactly at this point, the U.S. Energy Information Administration estimates that Mexico’s oil and natural gas production could rise by as much as 75 percent as a result of the new legislation. In addition,Mexico has at least 60 billion untapped barrels of crude oil onshore and in deep water, around 13 billion barrels of recoverable shale oil resources (ranking 8th in the world), and shale gas resources of at least 600 trillion cubic feet (ranking 6th in the world).
“We will pursue potential investment opportunities in Mexico,” shared Exxon Mobile in a statement to CNN.
The most promising fields are located in the deep waters of the Gulf of Mexico, since PEMEX has had no deepwater production in the area, leaving Mexico’s side of the maritime border largely unexplored. Following the reforms, discussions are underway with potential partners who have expertise drilling up to 3,000 meters below sea level.
“The country will reduce its dependency on foreign supplies and will guarantee its energy security,” shared President Enrique Peña Nieto. “The energy reform is also a green reform because it promotes the use of cleaner fuels such as gas, which pollutes 70 percent less than oil. It will also allow the production of energy based on renewable sources like solar, wind power and geothermal energy.”
The U.S. Energy Information Administration also said it expects to see “profound” change in Mexico’s oil production in the near future, predicting it will stabilize at around $2.9 million barrels per day through 2020, before rising to a high of 3.7 million barrels daily shortly thereafter.
“The model may herald a change in the overall direction in many other resource rich areas too,” writes the Saudi Gazette. “Eyes remain glued on Mexico.”
Click here to read more about Mexico’s oil and gas sector, as well as the future of sustainability and alternative energy in Latin America’s second largest economy.