Since 1938, Mexico’s vast petroleum resources have been controlled by Petróleos Mexicanos, or Pemex, the state-run oil and gas monopoly. But late last year, the Mexican government changed the rules of the game. Plagued by slumping domestic output that kept the country from taking advantage of $100-a-barrel oil – and increasingly squeezed out of the US by American shale supplies – Mexican President Enrique Pena Nieto called for sweeping energy reform.
In the country’s first major economic policy move since the 1994 NAFTA Agreement, the Mexican congress voted in December 2013 to dismantle the 75-year-old law that had established state control over oil and gas, and opened its reserves to foreign investment. The overhaul, the government hopes, will bring both the money and the technical savvy needed to increase production at mature fields, deep-water regions, and difficult-to-access shale formations.
Team Players: US and Mexico
Mexico and the US are long-time energy trading partners, with the US primarily importing crude oil from Mexico – chiefly heavy crude but also Olmeca light sweet crude – and then exporting refined petroleum products back. In recent years, however, the balance has been shifting. As our own domestic oil output has risen, our overall need for imports is declining. At the same time, Mexico is struggling to keep up with its own soaring energy demands. So while US imports of Mexican oil have dropped from 1.8 million barrels per day in 2006 to just 881,000 barrels per day in January 2014, US exports of petroleum products to Mexico – primarily gasoline and diesel fuel – have nearly tripled.