Mexico Oil and Gas Report Q4 2012
Business Monitor International, October 2012, Pages: 83
The Mexico Oil and Gas Report provides industry professionals and strategists, corporate analysts, oil and gas associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Mexico's oil and gas industry.
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 Calderón administration has had some success pushing through liberalisation measures but has not gone far enough. With President-elect 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 116,000b/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 ranks last, behind Argentina, 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 last 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 joint fourth together with Peru and Chile 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. 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 oil 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 forecast OPEC basket oil prices to remain elevated and average US$107.05 per barrel (bbl) in 2012, a figure similar to the 2011 average of US$107.52/bbl in 2012.
BMI Industry View 5
SWOT Analysis 7
Mexico Oil and Gas SWOT 7
Global Energy Market Outlook 8
Oil: Getting Closer To Emerging Markets Inflection Point 8
Table: Oil Consumption Forecasts, 2010-2016 (’000b/d) 10
Table: Oil Production Forecasts, 2010-2016 (’000b/d) 12
Regional Energy Market Outlook 16
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 And Forecasts, 2009-2016 25
Table: Mexico Oil & Gas – Long-Term Forecasts, 2014-2021 26
Oil Supply And Demand 28
Gas Supply And Demand 31
LNG 32
Refining And Oil Products Trade 33
Revenues/Import Costs 34
Oil And Gas Infrastructure 35
Oil Refineries 35
Table: Refineries In Mexico 35
Service Stations 37
Oil Storage Facilities 37
Oil Terminals/Ports 37
Oil Pipelines 38
LNG Terminals 38
Table: LNG Import Terminals In Mexico 38
Gas Pipelines 40
Regional and Country Risk/Reward Ratings 42
Table: Latin American Oil & Gas Risk/Reward Ratings 42
Table: Upstream Risk/Reward Ratings 44
Table: Downstream Risk/Reward Ratings 45
Mexico Upstream Rating – Overview 46
Mexico Upstream Rating – Rewards 47
Mexico Upstream Rating – Risks 47
Mexico Downstream Rating – Overview 47
Mexico Downstream Rating – Rewards 47
Mexico Downstream Rating – Risks 47
Competitive Landscape 49
Executive Summary 49
Table: Key Energy Players 49
Overview/State Role 50
Licensing and Regulation 51
Mexico Oil & Gas Report Q4 2012
© Business Monitor International Ltd
Page 4
Government Policy 53
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 64
Chevron – Summary 64
Petróleo Brasileiro – Summary 64
Total – Summary 64
Sinopec – Summary 64
Others – Summary 65
Service Companies 65
Table: Oil Consumption – Historical Data & Forecasts, 2009-2016 (’000b/d) 67
Table: Oil Consumption – Long-Term Forecasts, 2014-2021 (’000b/d) 68
Table: Oil Production – Historical Data & Forecasts, 2009-2016 (’000b/d) 68
Table: Oil Production – Long-Term Forecasts, 2014-2021 (’000b/d) 69
Table: Refining Capacity – Historical Data & Forecasts, 2009-2016 (’000b/d) 70
Table: Refining Capacity – Long-Term Forecasts, 2014-2021 (’000b/d) 70
Table: Gas Consumption – Historical Data & Forecasts, 2009-2016 (bcm) 71
Table: Gas Consumption – Long-Term Forecasts, 2014-2021 (bcm) 71
Table: Gas Production – Historical Data & Forecasts, 2009-2016 (bcm) 72
Table: Gas Production – Long-Term Forecasts, 2014-2021 (bcm) 72
Table: LNG Exports – Historical Data & Forecasts, 2009-2016 (bcm) 73
Table: LNG Exports – Long-Term Forecasts, 2014-2021 (bcm) 73
Methodology And Risks To Forecasts 74
Glossary Of Terms 75
Table: Glossary Of Terms 75
Oil And Gas Risk/Reward Ratings Methodology 77
Ratings Overview 77
Table: BMI’s Oil & Gas Business Environment Ratings – Structure 78
Indicators 78
Table: BMI’s Oil & Gas Upstream Ratings – Methodology 78
Table: BMI’s Oil & Gas Business Environment Downstream Ratings – Methodology 79
BMI Methodology 81
How We Generate Our Industry Forecasts 81
Energy Industry 81
Cross checks 82
Sources 82
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