BMI View: Mexico's historic energy sector liberalisation mark s the start of a fundamental shift for the country's hydrocarbons sector. Whilst it will b e a number of years before results are seen in the country's production and reserves data, over the long term t he reforms will bolster upstream activity and reverse a decade-long decline in oil production . Pemex ' s upstream activity will remain limited over the next two years amid the broad industry downturn.
|e/f = BMI estimate/forecast. Source: EIA, BMI|
|Crude, NGPL & other liquids prod, 000b/d||2,779.3||2,600.5||2,421.6||2,362.1||2,385.7||2,450.6||2,496.3|
|Refined products production, 000b/d||1,409.1||1,276.6||1,289.4||1,302.3||1,341.3||1,408.4||1,429.5|
|Refined products consumption & ethanol, 000b/d||2,007.0||2,027.1||2,057.5||2,094.6||2,142.7||2,196.3||2,251.2|
|Dry natural gas production, bcm||45.4||45.0||44.5||44.3||44.9||46.3||47.7|
|Dry natural gas consumption, bcm||73.3||76.9||81.5||87.3||91.6||94.8||97.7|
Latest Updates And Key Forecasts
Weak fundamentals combined with bearish speculative positioning have sustained weakness of benchmark prices below profitable levels for Mexican crude production. Our forecast for continued price volatility over the next several months will weigh on Mexico's already downbeat outlook, limiting investment into existing projects by state-owned Petroleos Mexicanos (Pemex). We therefore maintain our downbeat expectation for total liquids production in 2016 at -6.9% y-o-y implying a reduction of 180,000b/d this year. This compares to a decline of 6.4% y-o-y in 2015 and extends Mexico's overall losses for a 12th consecutive year.
The Mexican government's USD4.2bn bailout of Pemex underscores the state-owned oil company's continued struggles in the face of an elevated debt burden, sizeable arrears to oilfield service providers and limited liquidity. While the bailout will weigh on Mexico's sovereign credentials in the short term, we believe damage to investor sentiment will be mitigated by the government's history of prudent macroeconomic policies and Pemex's ongoing cost-cutting measures.
We affirm our long-held positive view for the accelerated development of natural gas pipelines in Mexico, with oil and gas pipelines set to continue expanding through 2017. Mexican consumption growth will remain strong over the coming years, driven by an expanding manufacturing sector and increased residential demand. We believe the major driver of this trend will be the government's efforts to expand the use of gas-fired thermal generation in the country's electricity mix, which will be increasingly fuelled by cheap gas imported from the US.
As part of energy sector liberalisation, Mexican officials have renewed their commitment to draw investment into the country's unconventional assets. The National Hydrocarbons Commission (CNH) will reportedly offer sections of the Burgos Basin - an extension of the vast Eagle Ford play in south Texas - as part of the Round One licensing process late this year or early 2017. We maintain our long-held view that Mexico's shale resources will fail to generate significant investor interest, delaying any production beyond our 10-year forecast period.
On April 14, commissioners at Mexico's National Hydrocarbons Agency (CNH) voted to improve the terms for the country's inaugural deepwater licensing round, which is set of December 5. By bolstering the attractiveness of the already highly prospective resources, we affirm our view that the 10 blocks on offer will generate strong investor interest despite the weakened state of the upstream sector globally. Building off of a round of amendments passed in January, investors will benefit from further clarity with respect to development timelines for the deepwater blocks.
The Mexico Oil & Gas Report has been researched at source and features BMI Research's independent forecasts for Mexico including major indicators for oil, gas and LNG, covering all major indicators including reserves, production, consumption, refining capacity, prices, export volumes and values. The report includes full analysis of industry trends and prospects, national and multinational companies and changes in the regulatory environment.
BMI's Mexico Oil & Gas Report provides professionals, consultancies, government departments, regulatory bodies and researchers with independent forecasts and competitive intelligence on the Mexican oil and gas industry.
- Benchmark BMI's independent oil and gas industry forecasts for Mexico to test consensus views - a key input for successful budgeting and strategic business planning in the Mexican oil and gas market.
- Target business opportunities and risks in the Mexican oil and gas sector through reviews of latest industry trends, regulatory changes and major deals, projects and investments in Mexico.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. SWOTs, KPIs and latest activity) and Competitive Landscape Tables.
BMI Industry View
Summary of BMI’s key forecasts and industry analysis, covering oil and gas reserves, supply, demand and refining, plus analysis of landmark company developments and key changes in the regulatory environment.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the upstream and downstream sectors and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series and forecasts to end-2024 for all key industry indicators, supported by explicit assumptions, plus analysis of key downside risks to the main forecast:
- Pricing: Oil price (USD/bbl, WTI, Brent, OPEC basket, Urals); oil products prices (unleaded gasoline, gasoil/diesel, jet/kerosene – USD/bbl) at global hubs.
- Production, Consumption, Capacity & Reserves: Proven oil reserves (bn barrels), production, consumption, refinery capacity and throughputs (‘000b/d); proven gas reserves (tcm), production and consumption (bcm) and fuels trade.
- Imports & Exports: Crude oil exports/imports (‘000s b/d) and value of crude oil trade in USD. Fuels exports/imports (‘000s b/d) and value of fuels trade in USD. Natural gas imports/exports (bcm), by pipeline and/or LNG, and value of natural gas trade.
BMI’s Oil & Gas Risk Reward Index
BMI’s Risk Reward Indices provide investors (independents, NOCs, IOCs, oil services companies) looking for opportunities in the region with a clear country-comparative assessment of the upstream and downstream market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
A profile of the upstream and downstream sectors, including analysis of reserves, output, consumption and trade of energy products; overview of the industry landscape and key players; assessment of the business operating environment and the latest regulatory developments.
Comparative company analyses by USD sales, % share of total sales, number of employees, year established, ownership structure, oil production (‘000b/d), gas production (bcm), downstream capacity (‘000b/d) and % market share.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate Company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
Regional perspective on size and value of the industry. Plus comparative rankings by production, refining, imports and exports of oil, gas and LNG.
Global Oil Market & Oil Products Outlook
Based on our country coverage of over 99% of global oil and gas production and consumption, BMI provides demand, supply and price forecasts to end-2024 for oil, gas and oil products.
The Oil & gas Reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.