Mayer Brown: Mexico’s Congress trying to enact energy reform amid falling production rates

It easily could take longer than many might expect before state-run Petroleos Mexicanos (Pemex) and other companies are able to unlock Mexico’s vast oil and gas resources, said Jordy Herrera, the nation’s immediate past secretary of energy, told a Mayer Brown energy conference in Houston on May 15.

Calling pending energy reform the “last big chance for Mexico to become a stronger economy,” Herrera said Mexico’s Congress is working to enact secondary legislation that would outline the logistics of implementing a sweeping constitutional amendment passed in December 2013.

Mexico’s Congress received proposed secondary legislation on Apr. 30. Pending energy reforms would allow companies other than Pemex to explore, develop, and produce oil and gas in Mexico. The reforms also will change the way the energy sector works inside the country, Herrera said.

“It’s a huge transformation,” he said, adding that it will take time for Mexico’s lawmakers and regulators to debate and implement the anticipated overhaul. The country has to figure out what types of contracts will be allowed, and contracts are expected to vary by area and by geology.

“Congress does not work that fast,” Herrera said, adding that Mexico’s oil production has declined for about a decade. The declining production is attributed to declines from mature fields such as Cantarell.

Herrera said current oil production is about 2.5 million b/d compared with a 2004 peak of about 3.5 million b/d and gas production is about 5.6 bcfd compared with peak numbers of 8 bcfd.

Meanwhile, Mexico has been importing increasingly larger volumes of gas and gasoline. The reforms have been lauded as a way for Mexico to reverse that trend. Some Mexican officials have said they want oil production to reach 3 million b/d by 2018 (OGJ Online, Oct. 20, 2011).

Jose Valera, a Mayer Brown partner in the global energy group, said Mexico was losing money with its energy monopoly structure because oil and gas production and reserves were on the decline while imports were rising.

Mayer Brown publicizes legal updates and its analysis on Mexico’s reforms through the law firm’s Mexico energy web site.

Preliminary figures from Pemex showed crude oil production during January through April fell to 2.49 million b/d compared with about 2.54 million b/d for the same period last year, the Wall Street Journal reported May 12.

“I think it is going to take longer than people are expecting,” for Pemex and other companies to develop and produce significant additional oil and gas volumes, Herrera said.

Round Zero allocations pending

In an initial process called Round Zero, Pemex requested that it be allowed to retain 85% of Mexico’s known oil and gas resources, Herrera said. Mexico’s government is scheduled to decide by Sept. 17 regarding what Pemex will be allowed to keep under Round Zero.

“My opinion is it is going to change a little,” Herrera said. “We think the final number should be around 75%.” That would open 25% of the nation’s known resources to competitive bidding by other companies outside Pemex.

Herrera said he also expects “a huge discussion” on whether Pemex will be allowed to farm out areas that it is authorized to keep under Round Zero.

“Pemex has never been in deep water and Pemex has never been in unconventionals,” Herrera said, adding that Pemex needs help with both finances and technology in these areas.

Contact Paula Dittrick at

Related Articles

Courts less deferential to regulatory agencies, GMU forum told

07/08/2015 US Supreme Court decisions in the recently completed term suggest that judicial deference to federal regulatory agencies is starting to recede, spe...

Husky Energy reports unplanned maintenance at Lloydminster upgrader


Husky Energy Inc. reported unplanned maintenance at its Lloydminster heavy oil upgrader in Saskatchewan.

AER orders Apache Canada to address integrity of pipeline system

07/08/2015 Alberta Energy Regulator has directed Apache Canada Ltd. to address the integrity of its pipeline management system because of “failure to follow p...

Stone confirms oil pay with Cardona development well in deepwater gulf

07/08/2015 Stone Energy Corp., Lafayette, La., encountered 288 ft of net pay in two intervals with its Cardona No. 6 development well on Mississippi Canyon Bl...

API releases pipeline safety recommended practice

07/08/2015 The American Petroleum Institute released a pipeline safety recommended practice that it developed with engagement from the US Pipeline and Hazardo...

MARKET WATCH: Brent oil prices climb; NYMEX oil price holds below $53/bbl

07/08/2015 US light, sweet crude oil prices settled slightly lower on the New York market July 7 to remain under $53/bbl as Brent crude oil prices gained mode...

EIA: US oil output fell 50,000 b/d in May

07/07/2015 Total US crude oil production dropped 50,000 b/d in May compared with April and is expected to continue falling through early 2016 before growth re...

BLM approves ROW for Elko gas pipeline expansion project

07/07/2015 The US Bureau of Land Management’s Tuscarora, Nev., field office signed a decision record approving a right-of-way for Paiute Pipeline Co.’s (PPC) ...

Obama urged by IPAA president to lift ban on US crude exports

07/07/2015 Commending the administration for its actions allowing some condensate to be exported as a petroleum product, Independent Petroleum Association of ...
White Papers

Definitive Guide to Cybersecurity for the Oil & Gas Industry

In the Oil and Gas industry, there is no single adversary and no single threat to the information tech...

UAS Integration for Infrastructure: More than Just Flying

Oil and gas companies recognize the benefits that the use of drones or unmanned aerial systems (UAS) c...

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by
Available Webcasts

Operating a Sustainable Oil & Gas Supply Chain in North America

When Tue, Oct 20, 2015

Short lead times and unpredictable conditions in the Oil & Gas industry can create costly challenges in supply chains. By implementing a LEAN culture of continuous improvement you can eliminate waste, increase productivity and gain end-to-end visibility leading to a sustainable and well-oiled supply chain.

Please join us for this webcast sponsored by Ryder System, Inc.


On Demand

Leveraging technology to improve safety & reliability

Tue, Sep 22, 2015

Attend this informative webinar to learn more about how to leverage technology to meet the new OSHA standards and protect your employees from the hazards of arc flash explosions.


The Resilient Oilfield in the Internet of Things World

Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.


Taking the Headache out of Fuel License and Exemption Certificates: How to Ensure Compliance

Tue, Aug 25, 2015

This webinar, brought to you by Avalara, will detail the challenges of tax document management, as well as recommend solutions for fuel suppliers. You will learn:

-    Why it’s critical to track business partner licenses and exemption documents
-    The four key business challenges of ensuring tax compliance through document management
-    Best practice business processes to minimize exposure to tax errors


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!


Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected