Mexico's Oil and Gas Sector: Background, Reform Efforts, and Implications for the United States [August 17, 2015]   [open pdf - 1MB]

"Mexico is a top trade partner and the third-largest crude oil supplier to the United States. Mexico's state oil company, 'Petroleos Mexicanos' (Pemex) remains an important source of government revenue even as it is struggling to counter declining oil production and reserves. Due to an inability to meet rising demand, Mexico has also significantly increased natural gas imports from the United States. Still, gas shortages have hindered the country's economic performance. On December 20, 2013, Mexican President Enrique Peña Nieto signed historic constitutional reforms related to Mexico's energy sector aimed at reversing oil and gas production declines. On August 11, 2014, secondary laws to implement those reforms officially opened Mexico's oil, natural gas, and power sectors to private investment. As a result, Pemex can now partner with international companies that have the experience and capital required for exploring Mexico's vast deep water and shale resources. Leftist parties and others remain opposed to the reforms. The energy reforms transform Pemex into a 'productive state enterprise' with more autonomy and a lower tax burden than before, but make it subject to competition with private investors. They create different types of contracts for private companies interested in investing in Mexico, including production-sharing and licensing; allow companies to post reserves for accounting purposes; establish a sovereign wealth fund; and create new regulators. In December 2014, the Mexican government announced the terms of part one of Round 1, under which shallow-water offshore exploratory blocks available for public bidding would be auctioned. On July 15, 2015, Mexico's Energy Ministry announced that only 2 of the 14 blocks available were awarded to successful bidders. The government is likely to alter the terms offered, including the amount of investment required by companies, in order to attract more interest in subsequent bidding rounds."

Report Number:
CRS Report for Congress, R43313
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