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Mexico oil and gas

Hydrocarbon Engineering,

A new report on the Mexican oil and gas sector from focuses on the shifting energy dynamic between Mexico and its North American neighbours, it also asks what this will bring to the future of the country’s oil and gas sector.

Despite Mexico’s questionable history with reforms, industry leaders have expressed great optimism, and in some cases even disbelief, with regards to the extent and depth of the government’s renewed attempt to reform the sector. For many, this year will be about strategic analyses of the reforms and understanding the changes it will bring as well as legal frameworks that will be introduced.

Industry challenges

The report says that today, Mexicans are facing two challenges with respect to the oil and gas industry. First is securing a steady flow of affordable power to enable greater industrial and national developments. Average electricity prices in Mexico are 25% higher than those in the US, placing a high burden on consumers and the government, as well as the country’s manufacturing base. Second is Pemex’s inability to tap into individual companies’ experience, technology and the risk, leading to production decline despite increased investments in E&P: having pumped an average of 2.536 million bpd last year, Mexico and Pemex have faced nine years of production declines.

Over the last few years, a new energy dynamic has emerged between the US and Mexico. Unable to match domestic consumption with production, Mexico has grown increasingly reliant on imported natural gas: according to a report from Barclays Capital, US natural gas exports to Mexico will more than double in three years, from 2 billion ft3/d on average in 2013 to 4.5 billion ft3/d in 2016.


The new reforms seek to address the above challenges in a number of ways. Although wide in scope, the reforms broadly seek to increase investment and employment, as well as strengthen Pemex by granting it greater freedom in its decisions towards partnerships, modernisation and better results. Also, the energy reforms will help to strengthen the stewardship of the state as the owner of oil and gas resources and as regulator of the industry, and ultimately to generate greater economic and social wealth through lower energy prices and increased investment.

Adapted from press release by Claira Lloyd

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