Mexico is one of the largest producers of petroleum and other liquids in the world, the fourth-largest producer in the Americas after the United States, Canada, and Brazil, and an important partner in US energy trade. In 2014, Mexico accounted for 781,000 b/d, or 11% of US crude oil imports.
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Image from PEMEX. |
Mexico's oil production has steadily decreased since 2005 as a result of natural production declines from Cantarell and other large offshore fields. The rate of total production decline has slowed in the past several years. In December 2013, in an effort to address the declines of its domestic oil production, the Mexican government enacted constitutional reforms that ended the 75-year monopoly of Petroleós Mexicanos (PEMEX), the state-owned oil company.
Oil is a crucial component of Mexico's economy. The oil sector generated 11% of the country's export earnings in 2014, a proportion that has declined over the past decade, according to Mexico's central bank, according to the Banco de Mexico. More significantly, earnings from the oil industry (including taxes and direct payments from PEMEX) account for one-third of total government spending, a report from the New York Times said.
Declines in oil production have a direct impact on the country's economic output and on the government's fiscal health, particularly as refined petroleum product consumption and import needs grow.
Mexico's total energy consumption in 2014 consisted mostly of petroleum (45%), followed by natural gas (40%). Natural gas is increasingly replacing oil in electric power generation. However, because Mexico is a net importer of natural gas, higher levels of natural gas consumption will likely depend on more pipeline imports from the United States or liquefied natural gas (LNG) imports from other countries. All other fuel types contribute relatively small amounts to Mexico's overall energy mix. The country also has growing geothermal and wind energy capacity for electricity generation.
Petroleum and other liquids
Mexico produced an average of 2.8 MMb/d of petroleum and other liquids during 2014. Crude oil accounted for 2.4 MMb/d, or 87% of total output, with the remainder attributable to lease condensate, natural gas liquids, and refinery processing gain. Mexico's total oil production had been declining substantially, 27% from its peak in 2004. Notably, crude oil production in 2014 was at its lowest level since 1986 and has continued to decline thus far in 2015.
Exploration and production
Most of Mexico's oil production occurs off the eastern coast of the Bay of Campeche in the Gulf of Mexico, near the states of Veracruz, Tabasco, and Campeche. The two main production centers in the area are Cantarell and Ku-Maloob-Zaap (KMZ). In total, approximately 1.8 MMb/d—or three-quarters—of Mexico's crude oil is produced offshore in the Bay of Campeche. Because of the concentration of Mexico's oil production offshore, tropical storms or hurricanes passing through the area can disrupt oil operations.
Offshore
More than half of Mexico's oil production comes from two offshore fields in the northeastern region of the Bay of Campeche—Ku-Maloob-Zaap (KMZ) and Cantarell. Another important source of oil production is southwest in the same bay, offshore the state of Tabasco. Most of the oil produced at KMZ and Cantarell is heavy and marketed as Maya blend, while the oil produced offshore Tabasco is a lighter grade.
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