Mexico Oil and Gas Report Q3 2012

Published : July 2012
No. of Pages : 82

Price:

BMI View: We expect Mexico to slow the rate of production decline that has plagued its vital oil sector over the short term, but that the downward trend will persist without new discoveries or further sector reform – potentially seeing the country turn into a net oil importer by the end of the decade. The Calderon administration has had some success pushing through liberalisation measures but has not gone far enough. With the favoured candidate in the upcoming 2012 elections, Enrique Peña Nieto, advocating further reforms, the elections could prove a crucial turning point for the sector.
􀂃 BMI forecasts that oil and liquids production will fall slightly from 2.96mn barrels per day (b/d) in 2011 to 2.95mn b/d 2012. Oil and liquids will continue to decline from 2012, falling to about 2.72mn b/d in 2016, a fall of about 8% from 2011. Oil consumption over the same period is expected to rise at a moderate rate, reaching 2.25mn b/d by 2016, implying net exports of 467,000b/d.
􀂃 Gas output is forecast to remain essentially flat over the coming years. Gas production is projected to expand from 46.80bn cubic metres (bcm) in 2011 to 49.41bcm in 2016. This will do little to reduce import needs, however, as consumption is forecasted to rise rapidly from 61.29bcm in 2011 to 76.62bcm in 2016, implying an import requirement of nearly 30.00bcm by 2016, about double the 2011 import requirement.
􀂃 The long-term forecast for Mexico’s oil sector is dire. Oil production is seen continuing its downward spiral, falling to under 2.50mn b/d in 2019 before reaching 2.30mn b/d in 2021. Meanwhile, a healthy economic growth outlook is expected to see consumption rise by between 1-3% per year. That trend sees consumption exceed production for the first time in 2021, with an implied net import requirement of more than 113,000b/d for that year.
􀂃 This would mark a dramatic turnaround for the country considering that exports peaked at 1.80mn b/d in 2003 and the country was exporting more than 1.00mn b/d as recently as 2008. There is still plenty of time for Mexico to alter this long-term trend, but without more urgency in oil sector reform and new exploration efforts aimed at tapping deepwater Gulf of Mexico reserves the country faces the loss of crucial oil export revenues.
􀂃 Unless the government introduces a radical shift in energy policy, we expect state-owned Petróleos Mexicanos (Pemex) to retain full responsibility for oil production, with limited international oil company (IOC) involvement.
􀂃 Mexico holds ninth place, behind Ecuador, in BMI’s Risk/Reward Ratings (RRRs), which combine upstream and downstream scores. Despite being one of the region’s largest oil producers, the country now sits in ninth place in BMI’s updated upstream ratings. Although the absolute resource base may be large, the output growth outlook is poor, reserves-to-production ratios (RPR) are low, state ownership of oil assets is absolute and country risk is relatively high. Mexico ranks fourth in BMI’s downstream ratings, reflecting its high levels of oil and gas consumption, refining capacity and moderate country risk, plus low levels of projected oil and gas demand growth. Colombia is just two points behind Mexico and could mount a near-term challenge. Nonetheless, Mexico is one market that could move up the rankings. The country has taken tentative steps towards opening its market to foreign investment and the upcoming election will be crucial as to whether or not further liberalisation measures are taken. Mexico’s dependence on energy prices leads to high volatility in the country’s export revenues. Our assumptions of tight supply due to booming demand in emerging markets is clearly an opportunity for the country. As a result, we assume OPEC basket oil prices to increase from US$107.52 per barrel (bbl) in 2011 to US$111.47/bbl in 2012, thus creating an upside risk for the Mexican macroeconomic outlook.

BMI Industry View 5
SWOT Analysis . 7
Mexico Oil and Gas SWOT 7
Global Energy Market Outlook 8
Table: Oil Production Forecasts, 2010-2016 (‘000 b/d) .. 8
Table: Oil Consumption Forecast, 2010-2016 (‘000 b/d) .. 14
Regional Energy Market Outlook 15
Mexico Energy Market Overview 19
Table: Mexico Upstream Projects Database . 22
Industry Forecast Scenario ... 23
Oil And Gas Reserves . 23
Table: Mexico Oil & Gas – Historical Data & Forecasts, 2008-2016 ... 25
Table: Mexico Oil & Gas – Long-Term Forecasts, 2013-2021 26
Oil Supply And Demand 28
Gas Supply And Demand .. 30
LNG 31
Refining And Oil Products Trade 32
Revenues/Import Costs 33
Oil And Gas Infrastructure 34
Oil Refineries 34
Table: Refineries In Mexico ... 34
Service Stations . 36
Oil Storage Facilities .. 36
Oil Terminals/Ports 36
Oil Pipelines . 37
LNG Terminals . 37
Table: LNG Import Terminals In Mexico ... 37
Gas Pipelines 39
Regional and Country Risk/Reward Ratings . 41
Table: Latin America Upstream Risk/Reward Ratings... 43
Table: Latin America Downstream Risk/Reward Ratings .. 45
Mexico Upstream Rating – Overview .. 46
Mexico Upstream Rating – Rewards 46
Mexico Upstream Rating – Risks . 46
Mexico Downstream Rating – Overview 46
Mexico Downstream Rating – Rewards . 47
Mexico Downstream Rating – Risks . 47
Competitive Landscape . 48
Executive Summary . 48
Table: Key Energy Players 48
Overview/State Role 49
Licensing and Regulation 50
Government Policy 52
International Energy Relations .. 54
Table: Upstream Players . 55
Table: Downstream Players... 55
Company Monitor . 56
Petróleos Mexicanos (Pemex) 56
Repsol YPF Mexico 61
Shell – Summary 63
Chevron – Summary. 63
Petróleo Brasileiro – Summary .. 63
Total – Summary 63
Sinopec – Summary 63
Others – Summary . 64
Service Companies . 64
Table: Oil Consumption Historical Data & Forecasts, 2009-2016 (000b/d) ... 66
Table: Oil Consumption Long-Term Forecasts, 2014-2021 (000b/d) 67
Table: Oil Production Historical Data & Forecasts, 2009-2016 (000b/d) .. 67
Table: Oil Production Long-Term Forecasts (000b/d) .. 68
Table: Oil Refining Capacity Historical Data & Forecasts, 2009-2016 (000b/d).. 68
Table: Oil Refining Capacity Long-Term Forecasts, 2014-2021 (000b/d) ... 69
Table: Gas Consumption Historical Data & Forecasts, 2009-2016 (bcm) .. 69
Table: Gas Consumption Long-Term Forecasts, 2014-2021 (bcm) ... 70
Table: Gas Production Historical Data & Forecasts, 2009-2016 (bcm) . 70
Table: Gas Production Long-Term Forecasts, 2014-2021 (bcm) 71
Table: LNG Exports, Historical Data & Forecasts, 2009-2016 (bcm) .. 71
Table: LNG Exports, Long-Term Forecasts, 2014-2021 (bcm) 72
Methodology And Risks To Forecasts . 73
Glossary Of Terms ... 74
Table: Glossary Of Terms 74
Oil And Gas Risk/Reward Ratings Methodology 76
Ratings Overview 76
Table: BMI’s Oil & Gas Business Environment Ratings – Structure . 77
Indicators 77
Table: BMI’s Oil & Gas Upstream Ratings – Methodology 77
Table: BMI’s Oil & Gas Business Environment Downstream Ratings – Methodology 78
BMI Methodology . 80
How We Generate Our Industry Forecasts . 80
Energy Industry 80
Cross checks . 81
Sources ... 81Table: Oil Production Forecasts, 2010-2016 (‘000 b/d) . 8

Table: Oil Consumption Forecast, 2010-2016 (‘000 b/d) . 14

Table: Mexico Upstream Projects Database . 22

Table: Mexico Oil & Gas – Historical Data & Forecasts, 2008-2016 . 25

Table: Mexico Oil & Gas – Long-Term Forecasts, 2013-2021 . 26

Table: Refineries In Mexico . 34

Table: LNG Import Terminals In Mexico . 37

Table: Latin America Upstream Risk/Reward Ratings. 43

Table: Latin America Downstream Risk/Reward Ratings . 45

Table: Key Energy Players . 48

Table: Upstream Players . 55

Table: Downstream Players. 55

Table: Oil Consumption Historical Data & Forecasts, 2009-2016 (000b/d) . 66

Table: Oil Consumption Long-Term Forecasts, 2014-2021 (000b/d) . 67

Table: Oil Production Historical Data & Forecasts, 2009-2016 (000b/d) . 67

Table: Oil Production Long-Term Forecasts (000b/d) . 68

Table: Oil Refining Capacity Historical Data & Forecasts, 2009-2016 (000b/d). 68

Table: Oil Refining Capacity Long-Term Forecasts, 2014-2021 (000b/d) . 69

Table: Gas Consumption Historical Data & Forecasts, 2009-2016 (bcm) . 69

Table: Gas Consumption Long-Term Forecasts, 2014-2021 (bcm) . 70

Table: Gas Production Historical Data & Forecasts, 2009-2016 (bcm) . 70

Table: Gas Production Long-Term Forecasts, 2014-2021 (bcm) . 71

Table: LNG Exports, Historical Data & Forecasts, 2009-2016 (bcm) . 71

Table: LNG Exports, Long-Term Forecasts, 2014-2021 (bcm) . 72

Table: Glossary Of Terms . 74

Table: BMI''s Oil & Gas Business Environment Ratings – Structure . 77

Table: BMI''s Oil & Gas Upstream Ratings – Methodology . 77

Table: BMI''s Oil & Gas Business Environment Downstream Ratings – Methodology . 78

Mexico Oil and Gas Report Q3 2012

Published By: Business Monitor International

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