On Aug. 11, President Enrique Peña Nieto signed into law new rules to open Mexico’s state-run oil, gas and electricity industries to foreign and private companies after 76 years of government control. A key objective of the reform is to reverse the declining oil and gas production taking place over recent years.
The decline is commonly attributed to insufficient operational capabilities and capital of the state-owned oil company, Petróleos Mexicanos (Pemex) which prevents it from producing from the country’s deepwater and shale resources. According to a March 4 article in Bloomberg, “Pemex CEO Invites World to Tap Mexico’s Energy Shale Reserves,” Crude production from Pemex has fallen for nine consecutive years, from 3.3 million barrels a day in 2004 to 2.52 million barrels a day in the fourth quarter of 2013 due to insufficient investment in exploration and production. The production has fallen to the point where its petroleum trade balance with the United States has fallen into negative territory for the first time in at least 40 years, according to a March 14 article in the Wall Street Journal, “Oil-Rich Mexico Becomes Net Importer of U.S. Petroleum Goods.“
