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August 13, 2014, México City, Mexico. Secretary of Energy Pedro Joaquín Coldwell takes part in the presentation of Round Zero and One of the energy reform at the Technological Museum of the Federal Electricity Commission. The government announced that day that Pemex would function exclusively for exploration and exploitation of oil.
handle increased production of oil, electricity, and natural gas imports. Mexican energy experts are largely very positive about the changes: “The energy sector in Mexico—it’s as if you were a treasure hunter, and this is the last treasure in the world,” observes Luis Vielma Lobo, President and CEO of CBM Explo- ration and Production. He notes that the nation is perhaps the last large country left in the world with well-known resources to open up.
OIL FALTERS
It is a brave new world for Mexico’s energy sector, but on the oil side, the opening scenes have been framed by faltering crude prices, and the short-term outlook does not fare much better. Oil prices breached US$147 a barrel in 2008, a year when the meme of “peak oil” framed investors’ perceptions of the energy sector. As late as 2013, the year of Mexico’s energy reforms, the annual global price for oil was still north of US$90 a barrel.
But the higher oil prices brought consequent crude conser-
Energy scholar Richard Vietor noted in early 2017, “As a country rich with sunlight, wind, geothermal and water resources, Mexico has significant potential for the development of renewable energy.”
vation and development of alternative fuels, as well as rising production of U.S. shale oil. As of early July 2017, oil was trad- ing under US$45 a barrel, despite production ceilings agreed to for 2017 by OPEC and Russia, the world’s second-largest oil exporter.
Yet due to the reforms, the Intenational Energy Agency (IEA) is very bullish on Mexico oil production and predicts a robust 70 percent hike in crude and natural-gas distillates output, to 3.4 million barrels per day (mbd) by 2040, up from a low point of 2.0 mbd in 2020. The IEA predicts that enlarged Mexican oil production will come from enhanced oil recovery techniques in existing fields; an increase in shallow- and deepwater produc- tion; and the development of shale deposits onshore, as well as the heavy-oil Chicontepec field northeast of México City.
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