Featured Research

from universities, journals, and other organizations

Mexico could become oil importer by 2020 without new investment

Date:
April 29, 2011
Source:
Rice University
Summary:
Without sufficient investments in upstream oil field activities utilizing new and advanced technologies, Mexico faces the prospect of becoming a net oil importer in 10 years, according to new research.

Without sufficient investments in upstream oil field activities utilizing new and advanced technologies, Mexico faces the prospect of becoming a net oil importer in 10 years, according to new research by Rice University's James A. Baker III Institute for Public Policy and Oxford University. The stakes of the current political stalemate over oil are quite high, the study concluded. Were Pemex, Mexico's national oil company, able to fully develop its oil in line with international standards and technology, Mexican citizens could earn $1,055 per capita per year by 2020, versus $546 if current trends continue.

The two-year study will be released April 29 at a roundtable in Mexico City, co-hosted by Mexican Council on Foreign Relations. The study consists of 14 specialized academic papers authored by scholars from Oxford University, Rice University, Centro de Investigación y Docencia Económicas, National Autonomous University, Instituto Technológico Autónomo de México, Instituto de Investigaciones, Instituto Mora and Monterrey Institute of Technology and Higher Education.

Mexican petroleum production has been falling -- more than 25 percent since its peak in 2004 of 3.9 million barrels per day. Mexico produced 2.98 million barrels per day in 2010. The giant Cantarell field, in particular, has seen a significant drop in production. Meanwhile, domestic demand for oil has grown from 500,000 barrels per day in 1971 to roughly 2.15 million barrels per day in 2010. At present, Mexico is a net oil exporter, with total net exports in 2009 running at just under 1 million barrels per day.

These two trends -- lower overall production and growing internal demand -- pose serious challenges for the Mexican government. The Baker Institute study examines three basic questions: What does Mexico want from its oil policies? What are the Mexican oil sector's medium- to long-term prospects? And how can Mexico best manage the foreseeable obstacles to achieving its underlying goals for the future of oil in Mexico?

Mexico, the study found, has "three fundamental long-term objectives for its oil sector: to retain ownership and control of subsoil resources ('resource nationalism'); to protect the national economy from external shocks and predation ('energy security'); and to distribute any surpluses generated from this national patrimony to the benefit of the Mexican people as a whole." These goals could generate conflict, the study noted. But despite these goals, the study also concluded, a more equitable distribution of oil revenues could wipe out poverty in the country and thereby create more grassroots political backing for energy reforms. Instead, existing federal spending practices benefit the country's most wealthy citizens.

Mexican leaders are keenly aware of the potential problems caused by falling oil exports and rising public expectations. Pemex has taken steps to slow the declining production by increasing investment in two newer fields. However, the study warned, enhanced recovery techniques for both onshore and offshore oil take years to have an effect.

Moreover, the study questioned whether the Mexican leadership has the will and the ability to reach long-term energy goals. "Political decision-making in the Mexican energy sector, like in many democratic societies, can become highly captive of vested interests," the study said, "with outcomes that are less than optimum for the stakeholder, in this case, the Mexican people." The study argued that for many of those vested interests, the status quo is quite advantageous.

The study's final determination is that the decline in Mexican oil revenues is likely to be gradual rather than rapid and reduce the chances that a sudden, deep crisis will create the political will to make hard choices or unpopular reforms. For instance, if Pemex is able to maintain production levels through new finds and better efficiency, it could postpone the export crisis for three decades. But even with this expanded time frame, it is not assured that Mexico will undertake an orderly adjustment. Rather, the study's authors concluded, "it can also generate incentives to postpone it or adjust to the fall in government revenues through the least-costly short-run solution, such as cutting public investment, which can, at the same time, generate the greatest adverse effects in the long run."

To read the study in its entirety, go to http://bakerinstitute.org/energy-forum/mexico-oil-2011.


Story Source:

The above story is based on materials provided by Rice University. Note: Materials may be edited for content and length.


Cite This Page:

Rice University. "Mexico could become oil importer by 2020 without new investment." ScienceDaily. ScienceDaily, 29 April 2011. <www.sciencedaily.com/releases/2011/04/110429095117.htm>.
Rice University. (2011, April 29). Mexico could become oil importer by 2020 without new investment. ScienceDaily. Retrieved October 21, 2014 from www.sciencedaily.com/releases/2011/04/110429095117.htm
Rice University. "Mexico could become oil importer by 2020 without new investment." ScienceDaily. www.sciencedaily.com/releases/2011/04/110429095117.htm (accessed October 21, 2014).

Share This



More Earth & Climate News

Tuesday, October 21, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Traditional Farming Methods Gaining Ground in Mali

Traditional Farming Methods Gaining Ground in Mali

AFP (Oct. 20, 2014) — He is leading a one man agricultural revolution in Mali - Oumar Diatabe uses traditional farming methods to get the most out of his land and is teaching others across the country how to do the same. Duration: 01:44 Video provided by AFP
Powered by NewsLook.com
How Detroit's Money Woes Led To U.N.-Condemned Water Cutoffs

How Detroit's Money Woes Led To U.N.-Condemned Water Cutoffs

Newsy (Oct. 20, 2014) — The United Nations says water is a human right, but should it be free? Detroit has cut off water to residents who can't pay, and the U.N. isn't happy. Video provided by Newsy
Powered by NewsLook.com
Hey, Doc! Sewage, Beer and Food Scraps Can Power Chevrolet’s Bi-Fuel Impala

Hey, Doc! Sewage, Beer and Food Scraps Can Power Chevrolet’s Bi-Fuel Impala

3BL Media (Oct. 20, 2014) — Hey, Doc! Sewage, Beer and Food Scraps Can Power Chevrolet’s Bi-fuel Impala Video provided by 3BL
Powered by NewsLook.com
White Rhino's Death In Kenya Means Just 6 Are Left

White Rhino's Death In Kenya Means Just 6 Are Left

Newsy (Oct. 20, 2014) — Suni, a rare northern white rhino at Ol Pejeta Conservancy, died Friday. This, as many media have pointed out, leaves people fearing extinction. Video provided by Newsy
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
 
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:  

Breaking News:

Strange & Offbeat Stories

 

Plants & Animals

Earth & Climate

Fossils & Ruins

In Other News

... from NewsDaily.com

Science News

Health News

Environment News

Technology News



Save/Print:
Share:  

Free Subscriptions


Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

Get Social & Mobile


Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

Have Feedback?


Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
Mobile iPhone Android Web
Follow Facebook Twitter Google+
Subscribe RSS Feeds Email Newsletters
Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins