Oil and Gas Mexico
Despite Mexico’s rollback of energy reforms, projects already agreed are moving forward. Opportunities abound but companies need to be ready now, writes EIC’s Amanda C Duhon
I
n an effort to address its declining oil production, Mexico’s previous administration, under President Enrique Peña Nieto, enacted Reforma Energética (Energy Reform) in 2013 – putting an end to the national oil company (NOC) Petróleos Mexicanos’ (Pemex’s) monopoly and opening the market to private and international investment, while diversifying the Mexican economy.
Reforms bear fruit Round Zero kicked off the
Energy Reform by providing Pemex first right of refusal on developing assets. Pemex could thereafter farmout these assets into contracts and/or enter joint ventures with private international players to develop the asset. The private sector was then also able to enter the Mexican oil and gas market by bidding directly to the National Hydrocarbon Commission (CNH) for rights to develop assets not assigned to Pemex. Mexico saw some real success between 2015–2018 through its three licensing rounds. Fourteen auctions resulted in
110 contracts being awarded across deepwater, shallow and onshore fields, and a total of US$148bn being committed, including three farmout awards. As of August 2019, the Mexican government had approved 642 wells worth more than US$36.4bn. The country now has over 70 international companies operating in-market across the oil and gas value chain.
Rollback to nationalisation Mexico’s new energy market provided for market
competition, investment, and improved efficiencies and operations. However, when the new president Andrés Manuel López Obrador (AMLO) – a staunch opponent of the Energy Reform – took office in December 2018, he was committed to returning more control of the energy sector to Pemex. He cancelled Round 3.2 and 3.3 auctions and farmouts and delivered the Pemex 2019–2024 business plan to a lukewarm reception. In short, AMLO has promised that the renationalisation of Mexico’s oil and gas market will increase net oil production to 2.697MMbbl/d by the end of 2024, thereby reducing the country’s reliability on imports.
IMAGES: GETTY
MEXICO still holds promise
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