YEAR IN REVIEW
ROUNDS, DISCOVERIES, POLITICS DOMINATE OIL AND GAS INDUSTRY The past year spurred both optimism and trepidation. Discoveries in shallow waters and heightened exploration activity highlighted the successes of the licensing rounds while the reach of the Energy Reform extended to the liberalization of the retail gasoline market. But a political cloud still hangs over the sector
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With Mexico’s crude oil production at a 38-year low,
matters. Since the Energy Reform’s launch in 2013, the
following a 15-year decline, and the most important
E&P operator landscape has been transformed from a
elections in decades taking place this summer, the country’s
PEMEX monopoly to a competitive market with 73 winners
oil and gas industry finds itself at a crossroads. The 2013
representing 24 countries that have collectively been
Energy Reform transformed the industry’s outlook, but
awarded 107 blocks.
whether the over US$161 billion investment committed by the winners of the first 9 licensing rounds will reverse
Aldo Flores, Deputy Minister of Hydrocarbons at the Ministry
Mexico’s declining production is a key question that remains
of Energy, highlights the positive impact of the Energy
to be answered. At the same time, PEMEX still produces
Reform. “In total, we have over 170 new players across the
97 percent of the country’s oil and is destined to remain
oil and gas value chain. They are all interacting, competing
the dominant operator. Mexico’s next president will be
and developing their business models to foster a modern
instrumental in shaping the future of the Mexican oil and
and competitive industry in the country.” His perspective is
gas industry and operating environment of PEMEX, private
supported by Bernardo Cardona, Partner and Energy and
operators, and the entire supply chain.
Resources Industry Leader at Deloitte Consulting Mexico, who says that “the role of CNH, the Ministry of Energy
Looking at the past year, however, the industry’s momentum
and ASEA has been extremely important in achieving this,
is best summed up by one word: discovery. Outgoing
as they have conducted transparent and clear bidding
President Enrique Peña Nieto’s 2013 bet to liberalize the
processes and provided regulatory and legal frameworks
energy industry finally paid dividends in the oil and gas
that offered sufficient certainty to the market and made it
sector when Talos Energy, Sierra Oil & Gas and Premier Oil
attractive for companies to venture into Mexico.”
announced their historic discovery in the Zama-1 shallowwater well, estimated at over 1.4 billion boe. PEMEX also
LICENSING ROUNDS
flexed its onshore muscle in 2017 with its biggest discovery
Nine rounds have come and gone, and the results have been
in 15 years, at the Ixachi-1 well in the state of Veracruz.
internationally praised for their success, competitiveness and potential to increase Mexico’s reserves and production
These milestones were made possible by the successful
rates. In particular, Minister of Energy Pedro Joaquín
implementation of the licensing rounds, which the Ministry
Coldwell highlights the achievements of Mexico’s Energy
of Energy and CNH tweaked and adjusted from round to
Reform in the upstream sector. “The hydrocarbons licensing
round, with ASEA formulating the regulations that will
system has allowed us to reach 67 percent in contract
ensure industrial safety and environmental protection
allocation with 107 awarded contracts from 161 offers, and with no complaints from participating companies. Moreover,
WELLS COMMITTED IN LICENSING ROUNDS 40
we have had an average 74 percent government take. The expected economic spillover from these contracts amounts to US$161 billion and around 900,000 direct and indirect jobs in the country’s oil regions. New entrants into the market have created a highly diversified hydrocarbons
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industrial system with 73 operators from 24 countries, ranging from the world’s most renowned IOCs to 34 new
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Mexican companies founded after the reform’s approval.”
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Two more rounds – 3.2 and 3.3 – have been announced and Round 3.3 will be the first to include areas with
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unconventional resources. “We waited a longer time to R1.1
Source: CNH
R1.2
R1.3 R1.4
R2.1 R2.2 R2.3 R2.4 R3.1
tender unconventional blocks because the proper regulation had to be in place and we needed to communicate to society
