Energy in Mexico: Emerging Petroleum Exploration and Infrastructure Attracts Foreign Investment
March 16, 2015
Mexico currently sits above the fourth largest shale oil and gas reserve in the world,
according to a recent report published by The U.S. Energy Information Administration.
The potential for shale and oil gas production is leading international companies
to invest in the country. However, serious structural and technological barriers remain
for investors betting on accruing huge profits from Mexicos energy industry.
First, Pemex, Mexicos only oil and gas company, is currently under review for liberalization.
The government-run entity responsible for extraction, transportation, and refining
of all Mexican petroleum products is grossly inefficient, but on the road to becoming
a reliable trade partner. After Mexican government officials announced interest in
formally liberalizing the company, major US investment companies clamoured to purchase
BlackRock Inc. (BLK), and Pacific Investment Management Company, LLC (PIMCO), both
major investment companies, anticipate big payoffs if Pemex is liberalized and shale
oil and gas is reached. Laurence D. Fink, president and chief executive officer of
BlackRock Inc., recently made headlines by lauding Mexican debt as a tremendous opportunity
Mexico suffers from a poor technological and structural reality. Pemex and Mexico
currently lack the proper assets to refine, store, and primarily, transport the product
if and when it is extracted. However, there could be a deeper problem. Mexico may
encounter difficulties in locating, analyzing, and producing quality information for
upstream oil and gas production activities.
According to Barclays Investment Bank, Mexico commissioned eight major pipeline construction
projects due for completion in 2017 to bolster their ability to transport shale natural
gas and oil.
Mexico is expected to be a solid long-term investment for companies. With improving
technologies and ever-present global thirst for oil, the wave of energy production
that has hit the United States will likely cascade across the border into Mexico.
Today, companies are willing to front capital and invest in projects, but time will
tell if Mexico is able to allow production to begin. However, it all starts and ends
NOTE: Contains citations of sources published in 2013, 2014 & 2015.
"BlackRock's Fink Is Captivated by Pimco Favorite Mexico." Bloomberg.com.
Bloomberg, n.d. Web. 22 Feb. 2015.
"BP Statistical Review of World Energy 2013." (2013): n. pag.
Petroleum, June 2013. Web. 22 Feb. 2015.
"CNBC Exclusive: CNBC Excerpts: PIMCO Founder and Co-CIO Bill Gross and
Blackrock Chairman & CEO Larry Fink Speak with CNBC's Brian Sullivan."
. N.p., 04 Oct. 2013. Web. 22 Feb. 2015.
"Oil Nations Put Out Welcome Mat for Western Companies." WSJ. N.p., n.d. Web. 22 Feb. 2015.
Barclays: US Gas Exports to Mexico Will Accelerate
. Oil & Gas
Journal, 21 May 2013. Web. 22 Feb. 2015.
U.S. Crude Oil and Natural Gas Proved Reserves
. U.S. Energy Information Agency, 04
Wyman, Oliver, Mr. "The Energy Trilemma Index." Energy Trilemma Index. World
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Energy Council, 2015. Web. 22 Feb. 2015.