Mexico is quickly becoming a hotspot for international investors and financial institutions worldwide following a slew of historic reforms in late 2013 that opened up Mexico’s national oil company (PEMEX) to foreign investment in its considerable oil and gas reserves for the first time in 76 years.
“According to the latest estimates from the U.S. Energy Information Administration (EIA), Mexico has technically recoverable shale resources of 545 trillion cubic feet (cf) of natural gas and 13.1 million barrels of crude oil and condensate,” states Dr. Kent Moors, an internationally recognized expert in oil and natural gas policy, risk assessment, and emerging market economic development, writing for Money Morning. “According to the latest figures, [Mexico] is sixth in global shale gas reserves and seventh in tight/shale oil.”
In late March, Moors attended an economic summit organized by Bloomberg in Mexico City, joining an audience that was comprised of what he describes as “heavy hitters” from around the world, including principal banks, the largest oil and gas corporations, government officials, leaders from and a variety of other major figures from the global financial industry. According to Moors, the summit’s impressive turnout (where he says the attendees outnumbered the available seats three to one) is “a sign that a major new investment wave has begun” in Mexico.
In short, Mexico has proven that it offers huge opportunities for companies with the know-how to go in and help PEMEX recover its untapped shale gas and oil resources. There are currently at least five basins in Mexico that have been identified as having the best potential for extracting these resources, including Burgos, Sabinas, Tampico, Tuxpan and Veracruz. PEMEX has pledged at least $1 billion toward drilling 750 new wells and will begin shale gas production by 2015, with plans to produce at least 2 billion cf daily by 2025. By 2018, Mexico plans to produce upwards of three million barrels of oil daily, with PEMEX pledging to invest at least $27.7 billion this year alone to expand exploration and production.
“One does not have to be the actual manufacturer of the liquefied natural gas (LNG) moving internationally to benefit from the trade. So long as a country is extracting a substantial and continuous flow of natural gas, contracts can be swapped and paper cut,” writes Moors. “That means we will have additional investment options emerging in short order.”