We expect Mexico to slow the rate of production decline that has plagued its vital oil sector
over the short term, but that the downward trend will persist without new discoveries or further sector
reform – potentially seeing the country turn into a net oil importer by the end of the decade. The
Calderón administration has had some success pushing through liberalisation measures but has not gone
far enough. With President-elect Enrique Peña Nieto advocating further reforms, the elections could
prove a crucial turning point for the sector.
BMI forecasts that oil and liquids production will fall slightly from 2.96mn barrels per day (b/d)
in 2011 to 2.95mn b/d 2012. Oil and liquids will continue to decline from 2012, falling to about
2.72mn b/d in 2016, a fall of about 8% from 2011. Oil consumption over the same period is
expected to rise at a moderate rate, reaching 2.25mn b/d by 2016, implying net exports of
467,000b/d.
Gas output is forecast to remain essentially flat over the coming years. Gas production is
projected to expand from 46.80bn cubic metres (bcm) in 2011 to 49.41bcm in 2016. This will do
little to reduce import needs, however, as consumption is forecasted to rise rapidly from
61.29bcm in 2011 to 76.62bcm in 2016, implying an import requirement of nearly 30.00bcm by
2016, about double the 2011 import requirement.
The long-term forecast for Mexico’s oil sector is dire. Oil production is seen continuing its
downward spiral, falling to under 2.50mn b/d in 2019 before reaching 2.30mn b/d in 2021.
Meanwhile, a healthy economic growth outlook is expected to see consumption rise by between
1-3% per year. That trend sees consumption exceed production for the first time in 2021, with an
implied net import requirement of more than 116,000b/d for that year.
This would mark a dramatic turnaround for the country considering that exports peaked at
1.80mn b/d in 2003 and the country was exporting more than 1.00mn b/d as recently as 2008.
There is still plenty of time for Mexico to alter this long-term trend, but without more urgency in
oil sector reform and new exploration efforts aimed at tapping deepwater Gulf of Mexico
reserves the country faces the loss of crucial oil export revenues.
Unless the government introduces a radical shift in energy policy, we expect state-owned
Petróleos Mexicanos (Pemex) to retain full responsibility for oil production, with limited
international oil company (IOC) involvement.
Mexico ranks last, behind Argentina, in BMI’s risk/reward ratings (RRRs), which combine
upstream and downstream scores. Despite being one of the region’s largest oil producers, the
country now sits last in BMI’s updated upstream ratings. Although the absolute resource base
Mexico Oil & Gas Report Q4 2012 © Business Monitor International Ltd Page 6 may be large, the output growth outlook is poor, reserves-to-production ratios (RPR) are low, state ownership of oil assets is absolute and country risk is relatively high.
Mexico ranks joint fourth together with Peru and Chile in BMI’s downstream ratings, reflecting its high levels of oil and gas consumption, refining capacity and moderate country risk, plus low levels of projected
oil and gas demand growth. Nonetheless, Mexico is one market that could move up the rankings.
The country has taken tentative steps towards opening its market to foreign investment and the
upcoming election will be crucial as to whether or not further liberalisation measures are taken.
Mexico’s dependence on oil prices leads to high volatility in the country’s export revenues. Our assumptions of tight supply due to booming demand in emerging markets is clearly an opportunity for the country. As a result, we forecast OPEC basket oil prices to remain elevated and average US$107.05 per barrel (bbl) in 2012, a figure similar to the 2011 average of US$107.52/bbl in 2012.
Mexico Oil and Gas Industry 2012
Published: October 2012 No. of Pages: 83 Price: US $ 1175
Table of Contents
BMI Industry View... 5
SWOT Analysis ... 7
Mexico Oil and Gas SWOT... 7
Global Energy Market Outlook ... 8
Oil: Getting Closer To Emerging Markets Inflection Point .. 8
Regional Energy Market Outlook. 16
Mexico Energy Market Overview.. 19
Industry Forecast Scenario .. 23
Oil And Gas Reserves .. 23
Oil Supply And Demand... 28
Gas Supply And Demand . 31
LNG . 32
Refining And Oil Products Trade. 33
Revenues/Import Costs. 34
Oil And Gas Infrastructure... 35
Oil Refineries ... 35
Service Stations 37
Oil Storage Facilities... 37
Oil Terminals/Ports . 37
Oil Pipelines 38
LNG Terminals 38
Gas Pipelines ... 40
Regional and Country Risk/Reward Ratings .. 42
Mexico Upstream Rating – Overview.. 46
Mexico Upstream Rating – Rewards... 47
Mexico Upstream Rating – Risks 47
Mexico Downstream Rating – Overview. 47
Mexico Downstream Rating – Rewards .. 47
Mexico Downstream Rating – Risks 47
Competitive Landscape ... 49
Executive Summary.. 49
Overview/State Role. 50
Licensing and Regulation 51
Mexico Oil & Gas Report Q4 2012
© Business Monitor International Ltd Page 4
Government Policy . 53
International Energy Relations ... 54
Company Monitor . 56
Petróleos Mexicanos (Pemex). 56
Repsol YPF Mexico. 61
Shell – Summary . 64
Chevron – Summary 64
Petróleo Brasileiro – Summary... 64
Total – Summary. 64
Sinopec – Summary. 64
Others – Summary .. 65
Service Companies.. 65
Methodology And Risks To Forecasts 74
Glossary Of Terms 75
Oil And Gas Risk/Reward Ratings Methodology 77
Ratings Overview. 77
Indicators. 78
BMI Methodology.. 81
How We Generate Our Industry Forecasts .. 81
Energy Industry 81
Cross checks 82
Sources. 82
over the short term, but that the downward trend will persist without new discoveries or further sector
reform – potentially seeing the country turn into a net oil importer by the end of the decade. The
Calderón administration has had some success pushing through liberalisation measures but has not gone
far enough. With President-elect Enrique Peña Nieto advocating further reforms, the elections could
prove a crucial turning point for the sector.
BMI forecasts that oil and liquids production will fall slightly from 2.96mn barrels per day (b/d)
in 2011 to 2.95mn b/d 2012. Oil and liquids will continue to decline from 2012, falling to about
2.72mn b/d in 2016, a fall of about 8% from 2011. Oil consumption over the same period is
expected to rise at a moderate rate, reaching 2.25mn b/d by 2016, implying net exports of
467,000b/d.
Gas output is forecast to remain essentially flat over the coming years. Gas production is
projected to expand from 46.80bn cubic metres (bcm) in 2011 to 49.41bcm in 2016. This will do
little to reduce import needs, however, as consumption is forecasted to rise rapidly from
61.29bcm in 2011 to 76.62bcm in 2016, implying an import requirement of nearly 30.00bcm by
2016, about double the 2011 import requirement.
The long-term forecast for Mexico’s oil sector is dire. Oil production is seen continuing its
downward spiral, falling to under 2.50mn b/d in 2019 before reaching 2.30mn b/d in 2021.
Meanwhile, a healthy economic growth outlook is expected to see consumption rise by between
1-3% per year. That trend sees consumption exceed production for the first time in 2021, with an
implied net import requirement of more than 116,000b/d for that year.
This would mark a dramatic turnaround for the country considering that exports peaked at
1.80mn b/d in 2003 and the country was exporting more than 1.00mn b/d as recently as 2008.
There is still plenty of time for Mexico to alter this long-term trend, but without more urgency in
oil sector reform and new exploration efforts aimed at tapping deepwater Gulf of Mexico
reserves the country faces the loss of crucial oil export revenues.
Unless the government introduces a radical shift in energy policy, we expect state-owned
Petróleos Mexicanos (Pemex) to retain full responsibility for oil production, with limited
international oil company (IOC) involvement.
Mexico ranks last, behind Argentina, in BMI’s risk/reward ratings (RRRs), which combine
upstream and downstream scores. Despite being one of the region’s largest oil producers, the
country now sits last in BMI’s updated upstream ratings. Although the absolute resource base
Mexico Oil & Gas Report Q4 2012 © Business Monitor International Ltd Page 6 may be large, the output growth outlook is poor, reserves-to-production ratios (RPR) are low, state ownership of oil assets is absolute and country risk is relatively high.
Mexico ranks joint fourth together with Peru and Chile in BMI’s downstream ratings, reflecting its high levels of oil and gas consumption, refining capacity and moderate country risk, plus low levels of projected
oil and gas demand growth. Nonetheless, Mexico is one market that could move up the rankings.
The country has taken tentative steps towards opening its market to foreign investment and the
upcoming election will be crucial as to whether or not further liberalisation measures are taken.
Mexico’s dependence on oil prices leads to high volatility in the country’s export revenues. Our assumptions of tight supply due to booming demand in emerging markets is clearly an opportunity for the country. As a result, we forecast OPEC basket oil prices to remain elevated and average US$107.05 per barrel (bbl) in 2012, a figure similar to the 2011 average of US$107.52/bbl in 2012.
Mexico Oil and Gas Industry 2012
Published: October 2012 No. of Pages: 83 Price: US $ 1175
Table of Contents
BMI Industry View... 5
SWOT Analysis ... 7
Mexico Oil and Gas SWOT... 7
Global Energy Market Outlook ... 8
Oil: Getting Closer To Emerging Markets Inflection Point .. 8
Regional Energy Market Outlook. 16
Mexico Energy Market Overview.. 19
Industry Forecast Scenario .. 23
Oil And Gas Reserves .. 23
Oil Supply And Demand... 28
Gas Supply And Demand . 31
LNG . 32
Refining And Oil Products Trade. 33
Revenues/Import Costs. 34
Oil And Gas Infrastructure... 35
Oil Refineries ... 35
Service Stations 37
Oil Storage Facilities... 37
Oil Terminals/Ports . 37
Oil Pipelines 38
LNG Terminals 38
Gas Pipelines ... 40
Regional and Country Risk/Reward Ratings .. 42
Mexico Upstream Rating – Overview.. 46
Mexico Upstream Rating – Rewards... 47
Mexico Upstream Rating – Risks 47
Mexico Downstream Rating – Overview. 47
Mexico Downstream Rating – Rewards .. 47
Mexico Downstream Rating – Risks 47
Competitive Landscape ... 49
Executive Summary.. 49
Overview/State Role. 50
Licensing and Regulation 51
Mexico Oil & Gas Report Q4 2012
© Business Monitor International Ltd Page 4
Government Policy . 53
International Energy Relations ... 54
Company Monitor . 56
Petróleos Mexicanos (Pemex). 56
Repsol YPF Mexico. 61
Shell – Summary . 64
Chevron – Summary 64
Petróleo Brasileiro – Summary... 64
Total – Summary. 64
Sinopec – Summary. 64
Others – Summary .. 65
Service Companies.. 65
Methodology And Risks To Forecasts 74
Glossary Of Terms 75
Oil And Gas Risk/Reward Ratings Methodology 77
Ratings Overview. 77
Indicators. 78
BMI Methodology.. 81
How We Generate Our Industry Forecasts .. 81
Energy Industry 81
Cross checks 82
Sources. 82
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