Oil & Gas Sector In Mexico

Oil & Gas Sector In Mexico

The UK and Mexico face similar challenges: declining reserves, a need to maintain energy outputs and a need to protect the environment. Mexico plans to invest USD 20 billion per year up to 2025 through the State oil company Petróleos Mexicanos (PEMEX). The aim is to increase both production and proven levels of hydrocarbons reserves.

Market overview

Oil

Mexico is the seventh largest oil producer in the world. PEMEX is one of the largest oil companies in the world and ranks among the top 20 in terms of gas production. In Mexico, PEMEX is the sole producer of crude oil, natural gas and refined products.

PEMEX requires resources of around US$20 billion per year in capital expenditure. The focus is to maintain production in declining fields, a more efficient exploitation of proven reserves, a move towards deep-water production and to increase security and minimise environmental impact. Deep water accounts for more than half of PEMEX’s prospective hydrocarbons reserves, and the company has drilled only 16 deep water wells to date. Mexico has oil reserves of 45 billion barrels and proven reserves equivalent to 9.2 years of production.

In 2008, an energy reform was passed by the Mexican Congress in which PEMEX was granted greater autonomy for decision making, alleviating some of their previous restrictions and therefore opening it to do business with foreign companies.

In 2010, PEMEX announced and tendered its first incentive based contract model for exploration and production. In 2011, PEMEX tendered the first three incentive exploration and production contracts, two of which were won by UK company Petrofac. The first licensing round included the mature onshore fields of Carrizo, Magallanes and Santuario of which Petrofac won these last two.

In 2012, PEMEX announced the second round of tenders for the offshore fields of Atún, Pánuco, Tierra Blanca, San Andrés and Arenque. Petrofac was declared the selected bidder for the Arenque area, the first E&P offshore contract in Mexico, followed by an award of the Pánuco contract area in August 2012, which will be undertaken jointly with Schlumberger.

Field operations on the Pánuco and Arenque contracts, which both run for 30 years, are expected to start in December 2012 and during Q1 2013, respectively.

Companies that participated in the first and second round were pleased with the transparency of the tender process and this new contract scheme has been widely accepted by the industry.

PEMEX Exploration and Production have started an industry consultation process for the upcoming 2012-13 exploration and production bidding rounds in Mexico. On November 2012, PEMEX E&P New Business Development Unit visited London, UK in order to present the geological potential and business model for the third E&P bidding round centered on onshore Chicontepec. The business model envisioned for Chicontepec is geared towards value creation through common goals, technology, and innovation.

Gas

Mexico’s natural gas consumption is rising primarily due to greater use of the fuel in power generation.

While natural gas is replacing oil more frequently as a feedstock for power generation in Mexico, the nation is a net importer of natural gas. So, higher levels of gas consumption will likely depend upon higher imports. Even though Pemex supplies the necessary gas to the country, the way it is transported through the actual pipeline network seems insufficient. PEMEX is developing a strategy to exploit the significant reserves of shale gas located in the northeast of the country.

In 2011, President Felipe Calderón announced the structural change in the natural gas market. This was to improve the natural gas infrastructure, which includes an ambitious 6 year infrastructure pipeline project with a 10.5 billion dollar investment. This is expected to be ready for 2018.

There are 8 pipeline projects that will sum up to 4, 374 kms of new pipelines; it will cover from 22 to 26 states with the natural gas network, with 4.8 million of users. These projects, financed with public and private resources, will increment 38% of the network of transportation pipelines and 125% of the network of distribution pipelines.

Key opportunities

There will be a series of upcoming contracts for development of onshore and offshore fields. This includes parts of the heavy oil basin of Chicontepec and deep water projects in the Gulf of Mexico; PEMEX expects contracts of Chicontepec to be released Q1 2013.

Most opportunities will appeal to innovative and experienced operators and companies in areas such as: productivity, redesign, maintenance of wells, seismic surveys, environmental restoration/studies and infrastructure works.

Moreover, PEMEX is actively seeking new technology and is promoting R&D projects through the Mexican Petroleum Institute to tackle the heavy oil and deepwater challenges. UK companies and R&D centres could find an opportunity to do business with PEMEX in areas, such as Cantarell and Ku Maloob Zaap.

Onshore and Offshore Opportunities

• Platform design and construction.

• Decommissioning of production facilities.

• Design, construction, installation and commissioning of pipelines.

• Receiving terminals and production facilities.

• Exploration and appraisal drilling.

• Production operations.

• Environmental control.

• Regional geological studies (including 3D and 2D seismic).

• Reservoir appraisal and exploration techniques.

• Training and education.

• Deep water technology.

• Develop heavy and extra heavy oil recovery technology.

Latest export opportunities – Oil & Gas

Latest export opportunities – Mexico

Getting into the market

Whilst the great majority of the oil and gas industry is in hands of PEMEX, due to the energy reform passed in 2008 there are great opportunities for private investors that want to enter the oil and gas market in Mexico. There are opportunities for UK companies, particularly for equipment and service suppliers.

PEMEX has developed a strategic plan that considers that private investment will cover over 50 fields over the next 20-30 years and represent an investment of US$30 billion. To ensure their participation, UK companies might explore the possibility of establishing partnerships with current PEMEX suppliers.

More about doing business in Mexico

Contacts

Market intelligence is critical when doing business overseas, and UKTI can provide bespoke market research and support during overseas visits though our chargeable Overseas Market Introduction Service (OMIS).

To commission research or for general advice about the market, get in touch with our specialists in country – or contact your local international trade team.

  • Enrique Cornejo, British Embassy Mexico City. Tel:

(+52 55) 1670 3318 or email: Enrique.cornejo@fco.gov.uk

  • Elizabeth Briones, British Embassy Mexico City. Tel:

(+52 55) 1670 3244 or email: Elizabeth.briones@fco.gov.uk

Contact your local international trade team

UKTI Events

UKTI runs a range of events for exporters, including seminars in the UK, trade missions to overseas markets and support for attendance at overseas trade shows.

Latest events – Oil & Gas

Major Events

PEMEX’S Health & Safety Forum

January 30, 31 2012, February 1 2013

Mérida, Yucatán

http://sspa2013.com/

Mexican Petroleum Congress

June 2013

Cancún

http://congresomexicanodelpetroleo.com.mx

Energy Day 2013

October 2013

Mexico City

http://www.britchamexico.com/evnt-energy-day-2012-69.html

Border Energy Forum XX

November 5-7, 2013

San Antonio, Texas

Useful links

More about OMIS and other UKTI services for exporters

Sectors: Oil & Gas
Countries: Mexico
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