Mexico Looks Forward To Energy Reform

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Mexico is the third-largest source of foreign oil for the US after Canada and Saudi Arabia. In recent years however the country’s easy-pump crude has been quickly running dry and the amount of oil being produced in the country has been in steady decline. With such significant challenges up the road, a host of new energy reforms introduced by the government will bring the oil and gas industry back on track once again.

It’s been 75 years since President Lázaro Cárdenas seized the country’s foreign-dominated petroleum industry and placed every drop of oil under the everlasting domain of the Mexican people. He did this by establishing a state owned Petroleum Company called Pemex (Petróleos Mexicanos). Pemex once helped Mexico to become the fifth-largest oil exporter in the world and now the company is looking to regain that position by improving their operating efficiency and exploiting newly discovered shale gas and oil deposits in the country.  oil_production_consumption

Mexico is one of the 10 largest oil producers in the world and a major non-OPEC oil producer which is among the largest sources of US oil imports. Oil is a crucial component of Mexico’s economy. The oil sector made 16% of the country’s export income in recent years, according to Mexico’s central bank, a proportion that has decreased over time. More significantly, earnings from the oil industry accounted for 34 Percent of total government revenues.


Declines in oil production have a direct impact upon the country’s economic output and the government’s fiscal health, especially as refined product consumption and import needs grow.

Mexico’s total energy consumption in 2010 consisted mostly of oil (56 %), followed by natural gas (29 %). Natural gas is increasingly replacing oil as a feedstock in power generation. Although Mexico is a net importer of natural gas from the US or via liquefied natural gas (LNG) from other countries, it has considerable natural gas resources. However its production pales in comparison to its North American neighbors and the development of its unconventional shale gas resources is proceeding slowly.


All other fuel types contribute relatively small amounts to Mexico’s overall energy mix. Most of Mexico’s non-hydro renewables consumption is attributable to traditional biomass, the use of which is important in rural areas albeit difficult to quantify accurately. The country however also has a significant geothermal and wind energy sector.


According to the US Energy Information Administration, Mexico has the world’s fourth-largest gas reserves and improving the company, Petroleos de Mexico, has become a top priority for Mexico’s new president, Enrique Nieto. By doing this, Nieto hopes to boost the extraction of oil and gas and cover huge resources that exist in the country.

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