Mexico is in position to join the North American oil revolution as its new government looks to transform 75-year-old constitutional restrictions against foreign involvement in the oil sector. The change will allow U.S. firms to go in for the first time and help develop the country’s sizable untapped reserves.
Mexico’s oil sector is a primary source of growth for the economy and revenue for the government but has been in rapid decline in recent years because of the depletion of Mexico’s conventional oil fields in the Gulf of Mexico. A freeing up of the legal restrictions barring foreign investment proposed by Mexican President Enrique Pena Nieto last month aims to boost Mexico’s economy and wealth and to help put North America on the map as a potential new “Persian Gulf” for oil.
Mexico has reserves of oil estimated by industry analysts at 60 billion to 120 billion barrels in the deep-water Gulf, shale and other land deposits, but most of that has gone undeveloped. When combined with Canada’s huge reserves of oil in the Alberta oil sands and large shale oil resources that the U.S. is exploiting through pioneering technologies, the unlocking of Mexico’s oil wealth has the potential to transform the entire region.
Despite having some of the largest unexploited oil reserves in the world, Mexican production has declined sharply in recent years. Since 2006, net petroleum imports from Mexico have plunged by 70 percent, and crude imports last year dipped to less than 1 million barrels a day for the first time since 1994. The biggest source of decline has been the rapid depletion of the easily tapped oil in Mexico’s giant Cantarell oil field in the Gulf, once the second-largest oil field on the planet.
Mr. Pena Nieto’s legislation could be a game changer. The proposed reforms face something of a challenge to get through the national legislature. Left-wing and right-wing nationalist parties are promising to try to block the reforms, tapping into strong public sentiment against allowing foreigners to own or develop any of the nation’s rich natural resources. However, opinion polls show that 65 percent of Mexicans prefer to keep foreign developers out of their country.
- Mexico could make North America the world leader in oil production (peakoil.com)
- Mexico could make North America the world leader in oil production (mexicoinstitute.wordpress.com)
- Tens of thousands protest Mexican oil reforms (latimes.com)
- Mexico considers private sector investment in its oil industry (theoilandgasworld.wordpress.com)
- Mexico proposes private firms in oil industry (wfaa.com)