• 6 minutes Will the trade war hurt US project builds? Not if the US does it right.
  • 12 minutes OIl Targets from Experts to $300, vs. imho $52
  • 18 minutes Oil prices going down
  • 19 hours U.S. Challenges 5 WTO Members imposing Illegal Tariffs Against U.S. Products
  • 4 hours Chile Becomes The Latest Country To Commit To 100% Renewables
  • 16 hours Germany: We Can No Longer Fully Rely On U.S. White House
  • 13 hours Well from $74 we hit 67.xx now what?
  • 12 hours Venezuela, the largest oil reserve in the world, faces deep shortages of motor oil
  • 4 hours Does S Arabia Have 2 Mln Barrels in Spare Capacity?
  • 1 hour Chartist predicting a $1 fall, after WTI drops $10
  • 11 hours Where 3 Million Electric Vehicle Batteries Will Go When They Retire?
  • 16 hours Trade War of 1930s, Extended the Great Depression
  • 12 hours Rio Tinto Says $4-Million Goodbye to Coal
  • 20 hours Is Libya the current Iran for oil markets?
  • 19 hours Iran's President Warns Over U.S. Push For Countries To Stop Buying Oil From Iran
  • 19 hours Total Trade War: U.S. Threatens Tariffs On $200 BN of China Goods
  • 18 hours Apple's $300 fund in China
  • 16 hours Kaplan Says Rising Oil Prices Won't Hurt US Economy
Alt Text

OPEC Won’t Take Additional Action As Oil Prices Rise

UAE oil minister al-Mazrouei said…

Alt Text

A Storm Is Brewing For U.S. Oil Exports

As sanctions on Iran loom…

Irina Slav

Irina Slav

Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.

More Info

Trending Discussions

Mexico’s Oil Crescent Faces A Perfect Storm

Mexico

Most analyses of the 2014 oil price crash and its effects tend to focus on the oil industry itself. There are bitter accounts about how the price crash affected the lives of communities that were dependent on oil in the United States and Canada, but what happens in a country with a serious gang-related crime problem such as Mexico when oil prices crash? Nothing good, writes Reuters’ Gabriel Stargardter writes in a recent story.

Mexico had been struggling with declining oil and gas production for years before Enrique Pena Nieto’s government passed a major energy sector reform in 2013. The timing of the reform was ill-fated, however. The changed went into effect in 2014 as prices began to slide, dampening foreign investor appetite for Mexican oil and gas exploration.

Tens of thousands of people working for or with state energy major Pemex were let go during the crash. Many turned to crime for lack of other options, or simply to make an easier life, especially in the state of Tabasco. As of 2016, the oil-rich state, home to the first Mexican oil discovery, had the highest unemployment rate in the country and was the only Mexican state where poverty and extreme poverty have risen in recent years. In such an environment, crime is bound to thrive.

Crime seems to be rife among Pemex employees as well—while many are victims of crime, some are instigators or informants to local gangs that deal in stealing fuel from Pemex refineries as well as equipment and machinery. The company has said it has “zero tolerance” for criminal activity against its products and property, but there is only so much a company can do, even with the help of state and federal law enforcement authorities.

It looks like a perfect storm: after more than a decade of aggressively fighting drug cartels, the cartels shifted into other criminal areas, including theft and extortion across industries. Poverty, exacerbated in some parts of the country after the oil price crash, gave them more power and made it more difficult for the government to stimulate the much-needed foreign investment in oil. Some companies that had considered entering Mexico’s oil industry, Stargardter says, dropped their plans, too afraid they would become the target of kidnapping or theft.

This is how things look on the ground in oil-producing regions of the country that holds 29 billion barrels of oil equivalent in conventional fields and another 60 billion barrels in shale deposits. Higher up, however, in the National Hydrocarbons Commission, there is cause for hope.

Related: This Is Aramco’s Spare Production Capacity

Since the energy sector reform went into effect, Mexico has attracted some US$150 billion in potential oil and gas investments, which is more than Deloitte estimated it would attract back in 2014. Of course, these investments still have potential, but companies winning exploration rights have already spent millions of dollars in upfront payments for the drilling rights.

Companies including Exxon and Shell are expanding their presence in Mexico, and there are already new discoveries being made, including Pemex’s largest in 15 years, made in 2017. The company struck oil in the Ixachi well in Veracruz and has estimated the reserves of the field at 1.5 billion barrels of oil equivalent.

Now, there is concern that the frontrunner for the July 1 presidential elections, Andres Manuel Lopez Obrador, will make it difficult for foreign energy players to do business in the country. Yet the latest news from his camp is encouraging: an aide said this week Obrador could continue the tendering of oil fields despite earlier threats to suspend them “if everything we find is alright,” Alfonso Romo said, referring to Obrador’s suspicions of corruption in the contract-awarding process.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage

Trending Discussions


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News