Mexico Receives Record-Amount FDI in Oil and Gas Production
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Mexico Receives Record-Amount FDI in Oil and Gas Production

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Cas Biekmann By Cas Biekmann | Journalist and Industry Analyst - Tue, 12/07/2021 - 11:15

From January to September 2021, Mexico’s oil and gas sector attracted US$1,216 million dollars of foreign direct investment (FDI) toward production, a record amount according to data from the US Ministry of Economy and Department of Commerce. Regardless, Mexico’s investment climate is growing increasingly complicated.

The investment record stems from contracts awarded for land, shallow or deep water between 2015 and 2018, which began implementing their vast investment plans in the current year. Many of the world’s most prolific oil and gas companies contributed to the record, such as BHP, BP, Shell, Grupo R, Total, INPEX, Premier Oil, ExxonMobil, Talos, Diavaz, Fieldwood, Chevron, Murphy Energy, Hunt, Petrobal, Jagual, Lukoil, Hokchi Energy, Grupo Mexico, Jaguar E&P and China National Offshore Oil Corporation (CNOOC).

The US Department of Commerce estimated that the mentioned companies will invest around US$18 billion more up to 2024 in order to conduct seismic surveys, develop exploration efforts, and contract drilling equipment, amongst other services, all for about 794 wells.

Data from El Economista shows that the previous FDI record was achieved in 2015, right after the enactment of the 2014 Energy Reform, which liberalized the Mexican Oil and Gas sector. For the first time since Mexico’s nationalization of the industry, private investors from Mexico and abroad were able to participate in the bidding process for exploration, production and transportation of oil and gas.

At the time, US$1,074 million was invested. From 1999, public statistics began to be recorded and published online, the industry has raised US$6.3 billion. This highlights the importance of 2021’s investment numbers, which reached a fifth of total investment.

Nevertheless, the record belies a more complicated situation within Mexico’s foreign oil and gas participants. Seeking to save state oil company PEMEX, President López Obrador has put up barriers for private participation. This year, the government took control over the disputed Zama field, a discovery which its finder Talos Energy disputes. As the government gears up to push through sweeping reforms in the regulatory environment in the oil, gas and electricity sectors, private companies are vocal about how these changes have affected their business. US legislators have spoken out against the government as a result.

“In your opinion, if Mexico destroyed the private energy sector and if it nationalized and expelled US companies and transferred everything to corrupt and deteriorated state companies, would this be good for Mexico and this would be good for the United States?” said Texas Senator Ted Cruz at a Senate hearing this week.

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