The MIST nations (Mexico, Indonesia, South Korea and Turkey) are, currently, being hailed as the new BRIC nations (Brazil, Russia, India and China). Commentators are suggesting that MIST economies are now beginning to emerge far more rapidly and pointedly than the BRIC nations, where in some cases economies are considered to be plateauing and therefore becoming less prominent. However, over recent weeks, one MIST nation in particular, Mexico, has been drawn to my attention. In 2012, Mexico was the world’s ninth largest oil supplier and the third largest crude oil exporter to the USA. Now, as global economies shift, and new resource discoveries come in to play, is Mexico going to maintain its position in the global oil and gas rankings?
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When it comes to oil production, it is widely thought that Mexico peaked in the early 90s when the Cantarell discovery was producing 2.4 million bpd. Now that level has dropped to 400 000 bpd due to natural depletion; this is not a good position for Mexico to be in. Shale reserves have been discovered in the country, which could be a saving grace, yet, development of these reserves is not expected to be cheap or easy, so it may be sometime before Mexico reaps their benefits. This doesn’t put the country in good stead to maintain their own domestic demand, let alone that of their exports. According to the US Energy Information Administration (EIA), ‘Mexico’s domestic natural gas consumption is rising faster than domestic production…estimated average daily net exports from the United States to Mexico so far in 2013 (January 1 – May 6) has been 1.6 billion ft3/d, up almost 29% over the same period in 2012.’ Also on the gas production side, as the US has the capacity to produce so much cheap shale gas, Pemex has had occasion to cut natural gas production from its average of 6.5 billion ft3/d as producing that amount of gas, at current prices, isn’t making economic sense.
When it comes to refined end products, at the moment again, Mexico isn’t in a great position. Most of the crude in the country is considered to be heavy and Pemex, Mexico’s only state owned oil company, doesn’t have the refining facilities and infrastructure to process the quantities that are produced. Therefore, the majority is exported to the US for refining. According to EIA statistics, ‘in 2012 Mexico remained the largest volumetric importer of US petroleum products, importing nearly one fifth of all US petroleum product exports.’ Also, there is a very large black market for oil, which has resulted in estimated losses of US$ 1 billion. It seems that on the whole, Mexico may struggle to maintain its position in the global oil and gas rankings for numerous reasons from production to processing and unless the country can find solutions to its depleting reserves and increasing problems in the not too distant future, its position as a rising economic star may be lost.