Mexico is a major non-OPEC oil producer, with one of the world's largest oil companies, Pemex.
10/04/2008 ::
Index
- History
- PEMEX
- Downstream
- Natural Gas
- Energy consumption
History
Mexico is the sixth-largest oil producer in the world, and the second largest in the Western Hemisphere. State-owned Petroleos Mexicanos (Pemex) holds a monopoly on oil production in the country and is the 10th largest oil company in the world.
In 2006, Mexico produced an average of 3.71 million barrels per day (MMbbl/d) of total oil liquids. However, it is likely that Mexico will only produce 3.32 MMbbl/d in 2008. The decline is driven by falling production at the super-giant Cantarell field. In order to reverse this trend, the Mexican government has increased the annual investments in oil and gas exploration and production (E&P) to levels above US$ 10 billion since 2002, growing every year to a peak of US$ 17 billion in 2008.
The oil sector is a crucial component of Mexico’s economy: while its relative importance to the general Mexican economy has declined, the oil sector still generates over 10% of the country’s export earnings. The government relies upon earnings from the oil industry for one-third of total government revenues.
Mexico’s proven oil reserves were 12.4 billion barrels in 2007. Most reserves consist of heavy crude oil varieties. The largest concentration of remaining reserves occurs offshore in the southern part of the country, especially in the Campeche Basin. There are also sizable reserves in Mexico’s onshore basins in the northern parts of the country. Conservative estimates rate the potential for additional oil reserves in the deep Gulf of Mexico at 30 billion barrels.
PEMEX
The Mexican constitution provides that the Mexican nation owns all hydrocarbon resources in the country. Pemex has four operating subsidiaries: Exploration and Production, Gas and Basic Petrochemicals, Petrochemicals, and Refining. Pemex is the largest company in Mexico and one of the largest oil and natural gas companies in the world.
Pemex faces a variety of challenges in its efforts to stem Mexico’s oil production decline. This explains the large variety of E&P projects launched onshore and offshore the country, gradually moving from shallow to deep waters in the Gulf of Mexico. Thus, Pemex is gradually becoming a major customer of deep sea technologies and equipments to accelerate the finding of new reserves and to improve the recovery of the resources. In 2007, Mexico’s Congress approved a reduction in the tax rate levied on Pemex, which will make billions of additional dollars per year available to the company.
Most of Mexico’s oil production occurs in the Gulf of Campeche. In 2006, this area accounted for 80% of Mexico’s total crude oil production. Other important production centers are onshore basins in the northern and southern parts of the country.
The Cantarell oil field is one of the largest in the world, producing 1.8 million bbl/d of crude oil in 2006. In 1997, Pemex developed a plan to reverse the field’s expected decline by injecting nitrogen into the reservoir to maintain pressure. The plan was a success, though in 2004 the field finally began to decline. Since then, PEMEX has increased production in nearby fields, with many structures still under development. Production at the Ku-Maloob-Zaap (KMZ) complex has increased by 50% during the last decade reaching 403,000 bbl/d in 2006, and estimates indicate that it could reach 800,000 bbl/d by 2010. Another source is “Crudo Ligero Marino”, which aims to increase offshore production of lighter crude varieties by 250,000 bbl/d by 2010. Off the coast of Tabasco state, the Abkatun-Pol-Chuch complex produced 332,000 bbl/d of crude oil in 2006.
Downstream
Mexico’s oil consumption averaged 2 MMbbl/d in 2006. Mexico has six refineries with a capacity of 1.68 million bbl/d. The largest refinery is the 330,000-bbl/d Salina Cruz facility. Pemex also controls 50% of the 334,000-bbl/d Deer Park refinery in Texas. Despite being one of the world’s largest crude oil exporters, Mexico is a net importer of refined petroleum products. Thus, the present government envisages starting the construction of one or two new refineries during the coming years.
Natural Gas
Mexico’s natural gas reserves in 2007 were 14.6 trillion cubic feet (Tcf). The Southern Region of the country contains the largest share of proven reserves. However, the Northern Region will likely be the center of future reserves growth, as it contains almost ten times as much probable and possible natural gas reserves as the Southern Region. In 2006, Mexico produced 1.71 Tcf of natural gas, while consuming 1.98 Tcf. In order to reach self sufficiency, Pemex has increased its investments in natural gas E&P and corresponding pipeline infrastructure since 1998, which have made possible a steady growth in the production of this fuel year after year. However, natural gas consumption has also grown steadily, driven mostly by the electricity sector. In order to cover the gap, Mexico has allowed the construction of three LNG receiving terminals, while Pemex is reinforcing its E&P programs in natural gas.
Energy consumption
Mexico’s total energy consumption consists mostly of oil (59 percent), followed by natural gas (27 percent). All other fuel types contribute smaller amounts to Mexico’s overall energy mix. Natural gas is increasingly replacing oil as a feedstock in power generation. However, now Mexico is promoting the diversification of its primary energy fuel mix. The priority of the present Administration is to increase the production of renewable energy and to promote energy saving efforts.
By INTSOK Mexico