For the past 55 years, Mexico has prohibited private companies from owning any of its oil and natural gas production. The national oil and gas company PEMEX, once a major international energy player, has been reduced to an irrelevant player due to the government’s ever increasing and frequent siphoning of funds from PEMEX. The demise of PEMEX and the rise of the reform minded President Enrique Pena Nieto opens the door to changes to the Mexican constitution now allowing big energy companies to purchase oil and natural gas land.
Mexico’s break-even costs are low:
- Deep water production is $50/bbl or lower.
- Energy output from Mexico’s deep water could be transported to the U.S. by existing infrastructure.
- Mexico is far more stable than the Middle East.
Mexico is currently 10th in oil production and opening the country up to big energy will greatly benefit Mexico and the world energy market.