Mexico’s New Government To Encourage Oil Partnerships

The incoming Mexican government will encourage Pemex to partner with private oil companies to develop domestic resources, Reuters has reported, citing unnamed sources.

The move would be a departure from the policies of the Andre Manuel Lope Obrador government and a return to the approach used by his predecessor, Pena Nieto, whose government enacted energy market reforms aimed at stimulating the participation of more foreign oil companies in Mexico’s oil and gas development.

When the Obrador administration took over, it focused on restoring Pemex’s dominance in the local energy market, launching investigations into partnership deals inked by the previous government, and discouraging new deals of this kind.

Mexico currently produces around 1.5 million barrels of oil daily, down from a peak of 3.4 million barrels daily some 20 years ago.

Underinvestment has plagued the industry for years, which was the motivation for the Pena Nieto reforms that invited foreign players into the local industry.

According to the Reuters report, incoming president Claudia Sheinbaum has clear plans for growth in wind and solar energy but her stance on the local oil and gas industry has been less clear.

The sources that the publication cited, said that the partnerships considered by the new government would be farm-outs, where Pemex and its partners would share both the risks and the rewards of a project.

The purpose was to expand exploration.

The Reuters sources also said that the incoming administration was studying the Trion deepwater field as a possible blueprint for future partnerships.

Trion is a 60%-40% partnership between Australian Woodside Energy, which holds the bigger stake, and Pemex.

Earlier this year, Mexico’s National Hydrocarbons Commission announced that the nation’s total proven hydrocarbon reserves, encompassing both crude oil and natural gas, have increased to 8.383 billion barrels of crude oil equivalent.

Proven crude oil reserves declined slightly to 5.978 billion barrels from 6.155 billion barrels the previous year.

However, proven natural gas reserves saw a significant increase, rising to 12.297 trillion cubic feet from 11.029 trillion cubic feet.

Source: Oilprice.com