Guido van der Zwet
General Manager
IPS Powerful People
Expert Contributor

Mexico Oil and Gas: The Road Ahead

By Guido van der Zwet | Mon, 07/20/2020 - 09:12

At this moment in time, we are still fully under the circumstances of COVID-19 and its restrictions on life as we know (knew) it. Slowly restrictions are being loosened and economies are beginning to take the first steps of recovery.

As for oil and gas, especially for Mexico, the following is happening:

Oil prices took a beating and then recovered in a fairly short time. Travel restrictions have led to an unforeseen reduction in demand for oil of around 20–30 percent. The usage of oil can be divided into the following percentages: 18 percent is for non-energy purposes, such as plastic; 6 percent for aviation; 6 percent for shipping; 49 percent for transport over land; and 21 percent for other purposes. 

The most influential oil price, Brent crude, went from US$58.88 in February to US$19.33 in April and back to US$42.80 at the beginning of July. IOCs have cut budgets for the near future and OPEC+ has taken action to lower production and therewith safeguard oil prices. IOCs are preparing to be profitable at an oil price of US$40 per barrel. About 70 percent of proven reserves globally are still profitable at US$40; in Mexico, that is around 30 percent of proven reserves.

As for Mexico, which has been coping with diminishing oil production for over a decade, a new lowest point has been reached with the production of 1.6 million barrels last week. The newly launched Energy Plan 2020–2024 is mainly focused on obtaining sovereignty of Mexican resources and becoming energy self-sufficient. You can find the entire Energy Plan here: ( It includes increasing local production, refining and optimizing energy usage. Private companies are also considered to help with this plan, but no new auctions as we know them from the Energy Reform launched in 2014 are planned for the near future.

At this moment, the energy market shows the following (source CNH;


  • 396 blocks assigned
  • 93 in exploration stage
  • 258 in production (+200 declining) / 45 on hold

PEMEX farmouts

  • Cárdenas Mora Cheiron Holdings
  • Ogarrio Wintershall / DEA
  • Trion BHP

Private sector

  • 111 E&P contracts
  • 56 in exploration stage / 31 extraction stage
  • 24 reevaluation (PEMEX previously had discoveries)
  • 73 private companies
    • 38 Mexican

    • 35 foreign


US$44.4 billion approved as investment

US$5 billion solely focused on E&P activities


Recent successes for IOCs prove that the reserves in Mexico look promising and the country is in for better times. Companies like Talos Energy, Shell, Repsol, Murphy, Fieldwood, Hokchi and ENI have made significant discoveries and are working on exploration and extraction plans.

There are also discussions about whether renewable energy will be taking over a big part of energy supply. This is the case but with the growth of population, emerging economies and therewith demand of energy, the gap is too big to be filled with renewable energy alone. It is exciting to see that Tesla has taken over first place from Toyota in terms of value, becoming the most valuable carmaker in the world at the beginning of July. These are all signs of a more CO2 neutral future, while oil and gas are still replacing other energy sources such as coal. The energy forecast considering the Paris Climate Agreement still predicts the usage of between 80 and 110 million barrels of oil per day. With the current proven reserves (which are declining), this would lead to a shortage of up to 298 billion barrels between now and 2050. It is therefore of utmost importance that the search for new oil reserves continues.

With the loosening of restrictions, economies recovering and with that a growing demand for energy, Mexico seems a logical step for future investments. This is the time to reevaluate your strategic decisions and make plans on how to be part of the thriving market.

One of the challenges for Mexico will be personnel. What we have learned at iPS – Powerful People is that the workforce in Mexico is well-trained and improving by the day when it comes to quality, safety and training. Especially during the COVID-19 travel restrictions, we have been able to help foreign companies replace their foreign crew with local crew. Given Mexico’s 80-year oil and gas history, its workforce has a significant lead on other countries that must start from scratch. When iPS started in Mexico in 2007, the idea was to source Mexican candidates to be deployed in other parts of the world. With the current development of the market, it is feasible that the exact opposite will occur, where the Mexican workforce will need to be supported by foreign workforce merely to cope with the increase in activities. iPS as a global partner for personnel solutions is preparing for just that, with activities in over 15 countries and a workforce of over 80,000 qualified candidates from all over the world, for both operational/field personnel and administrative/office personnel.

Photo by:   Guido van der Zwet