Mexico’s ailing oil production is projected to turn a corner in 2020 as a result of wide-ranging energy reforms.
According to the IEA, the reforms, which began in 2013, will reverse the country’s declining oil production, increase the share of renewables in the power sector and slow the growth in carbon emissions.
The Reforma Energética ends PEMEX’s monopoly on the country’s oil and natural gas markets and opens them up to foreign direct investment.
As a result, Mexico’s total oil production, which has seen a sharp decline in recent years, is projected to ‘turn a corner’ around 2020 and then rise to 3.4 million barrels per day by 2040 – up almost one million barrels from today.
The increases is largely due to new offshore developments, including deepwater drilling, and helps restore Mexico’s position as a major global oil producer and exporter.
Dr Fatih Birol, executive director of the IEA, says: ‘This is not a reform, it’s a revolution on an unprecedented scale.
‘This transformation touches every sector of the Mexico energy industry and goes well beyond. However, let’s not underestimate the task ahead. It is a huge undertaking and there will be challenges but the reform has made remarkable progress.’
Without these energy reforms, the IEA’s Mexico Energy Outlook report finds that oil production would be one million barrels lower in 2040, with higher electricity costs and household spending would take a hit.