Last week, following months of negotiations, Mexico’s President Pena Nieto signed comprehensive new energy reforms into law. The constitutional amendments will allow both Mexican and non-Mexican investors to explore, produce and transport oil & gas, as well as engage in the refining and marketing of petroleum products - subject to up-front state restrictions. It mightn’t sound like much on the face of it, but Mexico was effectively a closed shop, so the amendments should open up a lucrative new market for UK companies.
As expected, Mexico’s national oil company Petróleos Mexicanos (Pemex) secured the lion’s share of the country’s proven and probable (2P) oil reserves (83 per cent), but it was only granted 21 per cent of prospective reserves. That’s a good deal below the share Pemex had been hoping to attain, which underlines President Nieto’s determination to knock Mexico’s ailing energy sector back into shape after years of neglect; production has fallen by nearly a third over the past 10 years, mainly due to a lack of infrastructure spending. Pemex is keen to tap foreign expertise through joint ventures, as it bids to reclaim the pre-eminent position in Latin American energy markets it lost to Brazil’s Petrobras several years ago.
The industry overhaul has been designed to boost inward investment, thereby restoring production to the levels seen at the start of the millennium. There should be no shortage of interest from foreign oil companies when bidding on the initial Round One tender gets under way next year. There are 109 fields up for grabs, covering some 14.6bn barrels of oil equivalent (boe) in prospective resources. That includes a range of deepwater and unconventional (shale) prospects, in addition to more straightforward plays in Mexico’s onshore Chicontepec basin.
