HOUSTON — The opening of Mexico’s energy market could bring in as much as $35 billion in outside investment for the country’s oil and gas plays, a Mexican oil executive told a Houston audience Wednesday.
Mexico’s national oil company Petroleos Mexicanos, or Pemex, has estimated that its capital budget will grow from $25 billion to $60 billion as a result of the joint ventures it anticipates forming with international partners in the coming year, said Froylan Gracia Galicia, Pemex’s executive chief of staff. These potential partnerships are among of the changes brought in by constitutional amendments passed last December that have opened up Mexico to international investment for oil and gas production.
Gracia was one of several speakers at a conference on Mexican Energy Reform, sponsored by the Greater Houston Partnership.
Lawmakers have allowed a much broader range of contracts than originally proposed, and Gracia said that will attract more international partners and capital to Mexico when it begins seeking bids for oil leases in June 2015.
“We were able to convince our lawmakers that in order to open the market, more competitive compensation needed to be available for investors in Mexico,” Gracia said. New contracts will allow partners to share profit or production, and in some cases, operate under independent licenses.
Mexico’s oil and gas resources no longer will be the exclusive domain of Pemex, as they have been since the 1930s when the Mexican government nationalized its oil industry.
That authority will move to the Ministry of Energy and the Ministry of Finance, as the government tries to recast Pemex as one of multiple potential players in its oil and gas sector.
Pemex plans to focus initially on its mature oil fields, hoping to benefit from international experience and cash to enhance recovery and further further develop such fields, Gracia said.
But it also hopes to move into unconventional plays in Northern Mexico, which remain mostly undeveloped but are believed comparable to the booming Eagle Ford Shale, which lies just across the border in South Texas.
“We have a lot of potential,” Gracia said, adding that Pemex has estimated that its fields could contain 54 billion barrels.
Independent operators will be able to participate in bidding next year, Garcia said, and Pemex will be eager to partner with those bringing in unconventional exploration and production expertise.
“We need to develop our skills in a lot of these areas, by partnering with companies’ skills in these areas,” Gracia said.