Mexico began the process of undoing its 75-year-old energy monopoly in 2013, but the subsequent crash in oil prices hindered the process and the international investments.
Fast-forward four years, and Mexican officials believe the country’s oil and gas sector is poised to finally take off now that oil prices have partially recovered and most of the governmental regulations are in place, said Aldo Flores Quiroga, Mexico’s undersecretary of hydrocarbons, speaking Monday at the Offshore Technology Conference at Houston’s NRG Park.
Mexico didn’t let the oil bust hinder its reforms, Flores Quiroga said.
“What that means is we’re doing this because it makes sense regardless of the price of oil,” he said. “It is indeed a challenge but our commitment — from what you can tell from how we’re marching forward — is very strong.”
Apart from offshore exploration in the Gulf of Mexico, 2017 also is seeing the first international investments in retail. BP in March opened the first gas station in 80 years in Mexico that isn’t under the Pemex banner. Pemex is the state-owned energy company that held the decades-long monopoly.
The BP station attracted a lot of attention in a short time, Flores Quiroga acknowledged.
“The lines of people to buy gasoline are very long — about a mile long,” he said. “People are willing to try what’s different.”
Still, the main focus of the reforms are on oil and gas production. The five-year plan involves opening up 509 exploration and production blocks and 82 production fields both offshore and onshore. New offshore investments could even tie into existing infrastructure from the deepwater U.S. Gulf as well as the shallow Mexican Gulf, he said.
Energy giants like Exxon Mobil, Chevron and BP participated in a December acreage auction.
Coming soon are auctions for conventional onshore oil and gas production, but the unconventional shale wells that have taken off in the U.S. still have a ways to go. That’s taking longer because Mexico had to start from scratch on regulation on techniques like hydraulic fracturing, called fracking. Still, it’s coming eventually.
“We want to facilitate investment, not block it,” Flores Quiroga said.