• 3 minutes Nucelar Deal Is Dead? Iran Distances Itself Further From ND, Alarming Russia And France
  • 5 minutes Don Jr. Tweets name Ukraine Whistleblower, Eric Ciaramella. Worked for CIA during Obama Administration, Hold over to Trump National Security Counsel under Gen McCallister, more . . . .
  • 9 minutes Shale pioneer Chesepeak will file bankruptcy soon. FINALLY ! The consolidation begins
  • 12 minutes China's Blueprint For Global Power
  • 3 hours Science: Only correct if it fits the popular narrative
  • 3 hours Crazy Stories From Round The World
  • 11 hours What are the odds of 4 U.S. politicians all having children working for Ukraine Gas Companies?
  • 16 hours EU has already lost the Trump vs. EU Trade War
  • 9 hours China's Renewables Boom Hits the Wall
  • 1 day ''Err ... but Trump ...?'' *sniff
  • 30 mins Do The World's Energy Policies Make Sense?
  • 10 hours Forget out-of-date 'dirty oil' smear, Alberta moving to be world's cleanest oil industry
  • 1 day Pioneer's Sheffield in Doghouse. Oil upset his bragging about Shale hurt prices. Now on campaign to lower expectations, prop up price.
  • 3 hours Impeachment Nonsense
  • 1 day Tesla Launches Faster Third Generation Supercharger
  • 15 hours Water, Trump, and Israel’s National Security
  • 2 days Passerby doused with flammable liquid and set on fire by peaceful protesters

Breaking News:

Russia Plans To Boost Crude Oil Exports

Alt Text

Worrying Data For OPEC

OPEC’s latest edition of its…

James Stafford

James Stafford

James Stafford is the Editor of Oilprice.com

More Info

Premium Content

This Week In Energy: 2015 Will Not See A Cuba, Mexico Oil Boom

Mexico’s sweeping energy reforms and Washington’s normalization of relations with Cuba are both great victories of 2014, but issues of security dull the potential for major projects in Mexico, while downward spiraling oil prices render deep-sea Gulf of Mexico projects too expensive.

The news earlier this week that the US would finally normalize diplomatic relations with Cuba following the release of an American government subcontractor and a swap of intelligence assets opens up a plethora of commercial opportunities for American business, but it will be some time before oil and gas are ready to take advantage of this.

Plummeting oil prices make significant exploration of the billions of barrels of crude believed to be buried off Cuba’s part of the Gulf of Mexico prohibitive right now. It’s there somewhere, but efforts over the past two years by majors such as Spain’s Repsol and Malaysia’s Petronas to find the oil have come up dry—or at least not wet enough for commercial development.

Drilling offshore Cuba will be expensive, and US and Mexican auctions of exploration licenses in the Gulf of Mexico will for now be prioritized by explorers. Even then, catastrophically low oil prices promise to put these big projects on hold.

In a soon-to-be-published exclusive interview with Oilprice.com, Breitling Energy CEO Chris Faulkner notes that current oil prices will put large offshore projects on hold. “These are $100 million wells. The only oil that is more expensive than this is Canadian oil sands,” he said.

Still longer-term, the industry has long considered the US embargo on Cuba a hindrance that has constrained business. The US trade embargo against Cuba led some companies to sink wells that did not contain more than 10% American-made components as required by the trade embargo, according to Fuel Fix.

And on a broader level, lifting the embargo would mean extending US influence in the region, and Gulf oil will play a major role in shaping this interest.

Then we have Mexico, which is luring the American industry across its borders through sweeping energy reforms that for the first time ever open up oil and gas exploration and production to foreign companies—ending the long-running monopoly by scandalized state-run company, Pemex.

Urgent Note: This week, our analyst Dan Dicker calls the midcaps out on their poor arithmetic and cuts to the heart of the matter: what companies have the strategies in place to survive long-term in a lower oil price environment and which of these is worth your time and your investment. Dan’s report is required reading for those who want to skip industry hand-wringing and obfuscation and get to the hard data. To get ahead of the competition – click here and start a 30 day free trial to Oilprice Premium.

But the New Year, according to Faulkner, may not bring Americans flooding over the border. Mexico, he says, “still has a long way to go.” Not only is it challenged by heavy decline, but drug cartels render it a much more difficult terrain to operate on than any Africa has to offer.

Even though the prolific Eagle Ford shale has its fairway running right under Monterrey, Mexico, making for great potential for extending this massive shale play across the border, this is the heartland of the drug cartels.

“When you talk about defending oil, drilling in Angola and Nigeria, you talk about a bunch of villagers who want to go drill a hole on a pipeline to steal some oil in a bucket. When you go out to Mexico, these guys are in armored cars and are looking to kill you to get cash,” Faulkner told Oilprice.com.

So while we welcome the New Year with concrete moves to lift the trade embargo on Cuba and a truly reformed Mexican energy scene, 2015 is not likely to be the year of Mexican or Cuban oil, or a bonanza in the Gulf of Mexico.

As 2014 draws to a close and market uncertainty abounds, get an early head start on 2015 by signing up for your free trial of Premium Service and delve into our industry-leading energy intelligence archives to find out just how much our expert analysis can help you make sense of it all.

By. James Stafford of Oilprice.com

Download The Free Oilprice App Today

Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play