Peak Oil is You

Donate Bitcoins ;-) or Paypal :-)

Page added on August 24, 2013

Bookmark and Share

Helping Pemex help Mexico

Helping Pemex help Mexico thumbnail

Mexico’s president, Enrique Peña Nieto, unveiled a proposal this month to reform the country’s state-owned oil and gas monopoly Petroleos de Mexico, or Pemex. The plan, which requires a constitutional amendment, would allow foreign firms to partner with Pemex for the first time since 1938, when then-President Lazaro Cardenas nationalized the industry. It’s a plan worth pursuing.

The proposal has enormous implications for Mexico’s growing and yet still-troubled economy. The waters off Mexico contain one of the largest oil and natural gas reserves in the world, but Pemex has yet to realize their potential because it lacks the technology and money to drill in deeper waters. One result is that the country’s oil production is declining, alarming to a government that relies on revenue from oil to make up about a third of the national budget.

Inviting foreign firms to help shoulder the costs of deep-water exploration in exchange for a share of the profits would surely help lift Mexico’s economy and boost sagging oil production for years to come. But not without costs. Continued dependence on oil will contribute to climate change, and deep-water drilling carries special perils, as Americans were reminded in 2010 when an oil rig in the Gulf of Mexico exploded, killing 11 workers and fouling thousands of miles of coastline.

Mexico, however, does not have the luxury of weaning itself from oil; its challenge is to extract that oil while minimizing the threat to the environment and maximizing economic benefit. Pemex does not appear up to that challenge. It has little experience in deeper waters, and some critics worry that it might cut corners or run risks that private companies would not accept. If Mexico is to engage in deep-water drilling, outside experts could help it do so safely.

Peña Nieto’s effort may help reduce dangers and take advantage of the country’s oil riches. If he invests some of that bounty in renewable fuel sources, he may help his country even more.

LA Times

2 Comments on "Helping Pemex help Mexico"

  1. bobinget on Sat, 24th Aug 2013 5:33 pm 

    Will new NG export pipelines to Mexico go UNDER or
    OVER that four billion dollar fence being proposed to
    protect our good American farmworkers from Jesus and Maria?

    July 2013

    “Hey Joe, I said, where you goin’ to run to now … where you gonna go?” now that no other options are left, Jimi Hendrix asked in his debut single, “Hey Joe.” Joe’s answer? “ I’m goin’ way down south, way down south, way down south to Mexico way!”

    Texas and other Southeast Gulf gas producers are in the same boat as Joe, Bentek says in a recent report titled “Growing Mexican Gas Market Creates Southwest Price Premiums.” Having lost some of their old buyers in the Northeast to shale gas producers closer to that market – and with the prospects of losing more – producers in the Eagle Ford and the Permian and Anadarko basins need new options, and are looking to the fast-growing Mexican market as a way out.

    In the first part of our two-part series, we examine how booming Mexican demand for gas is a boon for Texas gas producers. We look at what’s driving growth in Mexican demand, and why a planned expansion in domestic Mexican gas production will not be nearly enough to keep pace—at least for the foreseeable future. We also talk about the ongoing effort to expand pipeline capacity both at the border and within Mexico, and how that new gas-delivery infrastructure will open new markets to gas producers in Texas.

  2. bobinget on Sat, 24th Aug 2013 6:17 pm 

    I forgot to include a link for the above.

Leave a Reply

Your email address will not be published. Required fields are marked *