UK Trade & Investment – Mexico

Enrique Cornejo, Head of Energy and Environment

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Enrique Cornejo- Head of the Energy and Environment Team at UK Trade & Investment,
the commercial section of the British Embassy in Mexico. Our team has five
professionals dedicated to find business opportunities for UK companies in
Mexico, both in the oil & gas and renewable energies and environment
sectors. We provide specialised market entry reports, organise trade missions,
attend and organise conferences in Mexico, the UK and the US and keep in
contact with the key stakeholders of the energy industry. We work together with
multiple associations of the energy industry in the UK to raise awareness about
business opportunities in Mexico.

Mexico’s national oil company, Petroleos Mexicanos (PEMEX), is the fifth largest crude oil producer in the world and ranks fifteenth in natural gas. PEMEX develops all facets of the oil and gas industry in Mexico, from exploration and production to refining and processing.

Since 2005, PEMEX’s production has undergone a steady decline, from 3 million barrels per day to 2.5 million barrels per day in 2012. The downfall can largely be explained by the decline of the Cantarell field, which has gone from producing over 1 million barrels per day in the 1990s to less than 0.5 million barrels per day in 2012.

This led the company to invest in the exploration of new fields, notably in the deepwater Gulf of Mexico. PEMEX must now exploit resources at depths of up to 3,000 meters – where it is estimated that there may be some 29 billion barrels of oil. Main discoveries have occurred in the Perdido area of the Gulf of Mexico, in particular the Trion-I field that has estimated reserves of 400 M barrels.

Due to the technological needs and the risks involved in deepwater projects, PEMEX has changed its contract scheme to make it more attractive to private companies wishing to enter future exploration and production tenders. New contracts and tenders in deepwater are due for late 2013 or early 2014 and will be preceded by an energy reform. Estimated investment in deepwater exploration and production for 2012-2016 will reach £3,750m.

On the other hand, Mexico has uncovered huge shale gas reserves in the North of the country. According to the International Energy Agency, Mexico has the fourth largest shale gas reserve in the world, with around 681 trillion cubic feet. PEMEX started production in the first quarter of 2013; however, it is far from exploiting all its potential. The company’s strategic plan implies a £2 bn investment in the next four years, in order to explore and exploit 175 wells in the states of Coahuila, Veracruz, Tamaulipas and Nuevo Leon.

Though PEMEX’s upstream branch is the strongest and most lucrative, PEMEX also owns a huge downstream infrastructure. The company ranks thirteenth in the world in terms of refining capacity and operates six refineries in the country as well as five petrochemical complexes. PEMEX also shares a refinery in Deer Park, Texas, in a joint venture with Shell.

In 2013, the company will start the construction of the New Tula refinery in the state of Hidalgo that will be built next to an existing refinery in the same area and represents an investment of £7.64 bn. Furthermore, PEMEX plans to reconfigure its six refineries in operation, in order to improve its efficiency and respect international and national standards on clean gasoline.

In terms of pipeline capacity, PEMEX owns close to 70,000 km of pipes and is always in search of suppliers to improve the maintenance and safety of the installations. The company has just launched the Ramones project, a 1,021 km pipeline that represents up to £2 bn  of investment. The first phase of the project was won by Sempra Energy in partnership with PEMEX Gas and Basic Petrochemicals, under the name “Gasoductos de Chihuahua”. The second phase of the project is expected to take place in the second quarter of 2013.

Mexico offers a wide range of opportunities for British companies wishing to develop in the Oil and Gas sector:
• Platform design and construction.
• Decommissioning of production facilities.
• Design, construction, installation and commissioning of pipelines.
• Receiving terminals and production facilities.
• Exploration and appraisal drilling.
• Production operations.
• Environmental control.
• Regional geological studies (including 3D and 2D seismic).
• Reservoir appraisal and exploration techniques.
• Training and education.
• Deep water technology.
• Heavy and extra heavy oil recovery technology.

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