While the Mexican government has drastically overhauled the oil sector to allow foreign investment, recent news of enormous offshore discoveries are, to date, the largest and most significant manifestations of those reforms.
An average of 11 million barrels of fuel were stolen per year between 2009 and 2015, with the amount soaring to higher levels in 2016. Fuel theft could become a greater issue for Pemex if the increasing trend continues.
There is still a long way to go before Mexican production can grow in a meaningful way, but several years since the landmark liberalization of the country’s energy sector, the situation is finally moving in the right direction.
Low oil prices and soaring budget deficits have provided motivation for emerging markets to scrap the status quo with regards to fuel subsidies. Despite short-term pain from liberalizing prices, as seen currently in Mexico, longer-run benefits of curbing oil demand growth will emerge.
Mexico’s crude oil production has declined for 11 consecutive years, and a recovery is nowhere in sight.