Mexico Oil and Gas Industry

Mexico Oil and Gas Industry has witnessed a mixed result ever since post-nationalization. Mexico is sixth biggest producer of oil in world having seventh largest natural gas reserve in western hemisphere. Petróleos Mexicanos (PEMEX), Mexico’s state-owned petroleum company, which is a major force of oil and gas industry of Mexico, intends to pull in more bids from drilling contractors for 500 new development wells on Chicontepec field. Higher output from Chicontepec field is expected to compensate falling production from other fields of oil and gas industry at Mexico.

Mexico Oil and Gas Industry has witnessed a mixed result ever since post-nationalization. Mexico is sixth biggest producer of oil in world having seventh largest natural gas reserve in western hemisphere. Petróleos Mexicanos (PEMEX), Mexico’s state-owned petroleum company, which is a major force of oil and gas industry of Mexico, intends to pull in more bids from drilling contractors for 500 new development wells on Chicontepec field. Higher output from Chicontepec field is expected to compensate falling production from other fields of oil and gas industry at Mexico.

State owned energy sector of oil and gas industry in Mexico has failed to reinvest necessary funds to increase gas production. Lack of funding for optimum utilization and production of natural gas by federal government has led to insufficient production of oil and gas industry in Mexico. A recent report on Pemex states that this Mexican national oil company has launched a tender for five shallow water drilling rigs with an aim of maintaining output at its offshore production facilities.

Mexico is prone to face a possible energy crisis in near future despite having rich supply of hydrocarbons. In a recent interview given by Jesús Reyes Heroles, CEO of Pemex, he stressed that energy inefficiency is still a major problem at Mexico’s state oil company. Regressive trends in oil and gas industry of Mexico continue to persist as latest data released by Pemex highlighted that crude output fell to its lowest level in end of 2008 since 1995. Average production of 2.711mn barrels per day is a clear evidence that rate of production has suffered a further decline of 7% than 2007.

Mexico’s senate has given their assent to reform country’s oil sector. With a purpose of granting greater financial autonomy to their state-controlled oil company, senate voted in favor of Pemex. Approval of this reform is beneficial for Mexico oil and gas industry in attaining financial stability. It is a constructive step on government’s part to give authority to Pemex in employing foreign companies, which will assist it in oil exploration and development. In a situation when lack of investments hinders adequate refining capacity, such reforms are required more consistently to revive this potential industry.