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Page added on June 25, 2014
Mexico will not produce 3 million b/d until 2020
Delays in implementing Mexico’s sweeping energy sector reforms will prevent the country from producing over 3 million b/d until at least 2020, an executive with the country’s state oil company Pemex said Tuesday.
“We can increase, of course, but not enough to arrive at 3 million [b/d],” Fluvio Ruiz Alarcon, a professional and independent board member at Pemex, said on the sidelines of a Wilson Center event on Mexico’s energy reform. “I’m sure we’re going to produce over 3 million [b/d] but not by 2018. Maybe 2020, but not before.”
Mexican President Enrique Pena Nieto set the 3 million b/d by 2018 production goal as the country’s Congress passed a reform bill to end Mexico’s 75-year state oil monopoly in December. But hurdles in finalizing the secondary legislation needed to implement the reforms, a process which includes modifying or creating 21 separate laws and faces significant opposition from the country’s pro-business national action party (PAN), have already made this goal seem highly unrealistic.
“A lot of us didn’t understand how hard it would be to get the secondary legislation passed,” said Duncan Wood, director of the Wilson Center’s Mexico Institute. “This is far from being a done deal, this is far from over.”
New technologies and partnerships with some foreign firms could boost production in the near term by roughly 200,000 b/d, largely in mature, established fields, according Marcelo Mereles, a partner at EnergeA and a former Pemex international affairs advisor.
But production in undeveloped fields, in the Gulf of Mexico or in fields abandoned by Pemex will likely not be close to development by 2018, Mereles said.
“Virtually no greenfield project can take off in three and a half years,” Mereles said.
Still, Mereles said the delays in implementing the reforms are “not that substantial.”
At the same time, he said Nieto’s administration has political reasons to show the impact of the energy sector reform ahead of mid-term elections in July 2015. To do this, Mereles said he expects the first round of bidding for production rights to begin by December and to be wrapped up by May or June next year.
“I think that the government understands that there is a lot of pressure to show results here,” Mereles said.
The reforms will give foreign oil and gas companies development rights to gas and oil plays through production-sharing contracts or licenses. Despite stagnant production levels since 2009, Mexico has potentially the world fourth largest non-conventional oil and gas resources, according to Jeffrey Eppink, president and founder of Enegis, an energy consulting firm.
“Mexico has extremely good potential,” Eppink said in a presentation Tuesday.
Over the last 100 years, 41 billion barrels of oil and 72 Tcf of gas have been extracted, with about 160 billion barrels equivalent remaining, according to Pemex estimates.
10 Comments on "Mexico will not produce 3 million b/d until 2020"
rockman on Wed, 25th Jun 2014 2:23 pm
“Mexico has potentially the world fourth largest non-conventional oil and gas resources”. With “potential” being a somewhat overly optimistic characterization IMHO given that virtually no evaluation of those resources has been done with the drill bit.
But they do have a lot of shale formations in México. In fact, shale is by far the dominant sedimentary rock in the US and around the world. An the vast majority a those shale formations, including dozens in the US, have been proven to have little or no hydrocarbon potential. As witnessed by the fact thy even in THE shale development machine 80%+ of US shale production comes from just two fomtions
rockman on Wed, 25th Jun 2014 2:28 pm
…from just two formations: the Bakken and EFS. And most of that comes from just a couple of dozen counties. Having thick shale sections does not equate to big hydrocarbon potential. Just as the vast majority of the carbonate rocks in the ME, from which the mighty Ghawar produces, contains no commercial hydrocarbons.
TIKIMAN on Wed, 25th Jun 2014 4:44 pm
LOL are you kidding?
Cantarell is going into depletion. By 2020 Mexico will need all oil it produces for domestic use.
Makati1 on Wed, 25th Jun 2014 8:37 pm
TIKIMAN, by 2020, Mexico may be the 51st state or maybe the 52nd after Canada. It may not be verified by Congress (yet), but the Amero is coming.
How else do you explain the lack of laws being enforced to prevent illegal immigration from Mexico? The laws to give illegal migrants benefits and rights?
The North American Union is on track. You just don’t hear about it, like anything else your government wants to hide, like the TPP or the TTIP or, the real state of the nation.
Davy, Hermann, MO on Wed, 25th Jun 2014 8:44 pm
Give it a break Mak, you are so full of it sometimes. How about this Mak, the Philippians are going to be slave labor and sex workers for China in a few years.
simonr on Thu, 26th Jun 2014 4:09 am
I am confused, if Mexico is going to be absorbed into the USA, why would the USA change the name of its currency ?
Davy, Hermann, MO on Thu, 26th Jun 2014 5:23 am
Simon, sometimes Mak says the US is going to blow apart and be absorbed by Mexico and Canada. Which is it Mak? Your confusing yourself. Mak is an old guy with a screw missing.
Kenz300 on Thu, 26th Jun 2014 6:59 am
Wind and solar have more potential in Mexico and around the world.
Makati1 on Thu, 26th Jun 2014 9:06 am
Glad I give you a place to rant your ‘false patriotism’ Davy and to put down the Filipinos culture and country. You seem to be a typical ignorant American who only remembers the Philippines from old war movies. Why don’t you spend some of your wealth and travel a bit to the countries you hate. Yes, hate. It comes out in so many ways in your rants. Or is it envy? ^_^
How much has been in the US MSM in the last few years about the NAU? Little to nothing? Yet there have been many steps in that direction in the form of agreements in resources, security and borders. As for the Mexicans, among other reasons, the US needs a small border to protect and that lies south of Mexico. The US is becoming a walled city and will be forced to contract back inside it’s borders when the SHTF or before.
simonr, why did the European Union come up with the Euro? The USD is dying. It soon will only be toilet paper as far as the rest of the world goes. BUT, if they give it a new name and back it with Canada and Mexico’s resources…it will have a reprieve, or so they believe. A dollar by any other name…
simonr on Thu, 26th Jun 2014 9:37 am
Hi Mak.
Slightly different scenario, the EU was a coming together not a takeover.
With the size of the USA’s economy it would be a takeover.
After the petrodollar (we are a way from this yet) the Dollar would be worth as much as any other non gold backed currency.
As for re-branding, well what is the S&P rating for mexico.
Your premise seems to rest on the end of the petrodollar and this is not going to happen anytime soon.