By Stefanie Eschenbacher
MEXICO CITY (Reuters) – Mexico’s new President Claudia Sheinbaum is likely to face a new challenge, fulfilling the dream of energy independence that prompted her predecessor to spend $17 billion on a new refinery: a shortage of domestic crude oil.
The country is a major producer of crude oil, but production from the country’s older oil fields, mainly in the Gulf of Mexico, has fallen to the lowest level in more than four decades.
Without significant spending on exploration and production, Mexico could begin importing crude oil within the next decade to feed its expanded refinery capacity, a once-unheard of change in direction for the top global exporter.
For years, state-owned Pemex has failed to meet local fuel demand because its aging refineries were unable to process the heavy Mayan oil it primarily pumps.
As a result, Mexico exported crude oil, while having to import gasoline and diesel, largely from the United States. Outgoing President Andres Manuel Lopez Obrador promised to change what he saw as a humiliating dependence on imported motor fuels.
He ordered a new 340,000 barrel per day (bpd) refinery in his home state of Tabasco to address the fuel supply shortage caused by Pemex’s six refineries that had gone decades without enough investment to operate at capacity.
Lopez Obrador’s Olmeca refinery in Dos Bocas is over budget and behind schedule, but once the refinery fully starts up, Mexico could come close to matching the motor fuels the country consumes in the coming years.
However, previously unreported forecasts from the Energy Ministry seen by Reuters suggest that this period would be short-lived and that Pemex would likely have to start importing crude as production will decline rapidly from 2030 onwards.
Pemex, the Department of Energy and the president’s office did not respond to requests for comment for this story.
Zama, a shallow-water field about to become a deep-water field, and Trion, an ultra-deepwater field, would temporarily increase production to nearly 2.247 million barrels per day in 2028, from about 1.8 million barrels per day now in mid-2028. three scenarios from the Ministry of Energy showed.
In the most optimistic scenario, production will reach 2.390 million barrels per day, and in the more pessimistic scenario, 2.164 million barrels per day.
All three scenarios, which include some new discoveries, predict rapidly declining production from 2030 onwards.
That means Mexico would have to start importing crude oil as early as the next decade if it wants to run its refineries at maximum capacity, according to an Energy Ministry source familiar with the forecasts. It would also no longer export crude oil.
Zama and Trion could also disappoint, the source said, adding that other recent discoveries have done so as well.
UNDISCOVERED POTENTIAL
Alma America Porres, who served two terms as a commissioner at the hydrocarbon regulator, including during the landmark energy reform that aimed to open up the sector a decade ago, said Mexico’s proven crude oil reserves suggest the shortage could end even sooner can come.
“The proven reserves give us the most realistic picture of what is out there,” she said. “I don’t see a major discovery of the magnitude of Trion or Zama in the short term.”
Earlier this year, Mexico reported that its proven crude oil reserves fell to 5.978 billion barrels from 6.155 billion barrels a year earlier. However, his general proven reserves were lifted by.
Production from older fields – including the Cantarell field, once the second largest in the world after Ghawar in Saudi Arabia – has declined rapidly in recent years. Newer fields have not been able to compensate for this.
Lopez Obrador has invested heavily in the six refineries, increasing processing to about 1 million barrels per day. Yet the aging refineries are producing record amounts of heating oil instead of much-needed motor fuels.
Now that the Olmeca refinery has started up and the older refineries are being repaired, the Department of Energy forecasts that they will process 1.6 million barrels per day of crude oil, closer to but still below the consumption level of about 1.7 million barrels per day day, according to data from the International Energy Agency.
Experts have said that the huge sums spent on the Olmeca refinery could have been better spent on oil field exploration and production and diversification into renewable energy sources.
Lopez Obrador, a resource nationalist, has not held auctions for areas that could encourage other oil and gas companies to explore and invest in deepwater and onshore shale production, where Pemex lacks expertise and money.
The legal framework that allows companies to participate in exploiting fields on their own – or in partnership with Pemex – remains in place even after Lopez Obrador pushed through other reforms that prioritized Pemex.
“The exploration part requires a lot of investments, investments that Pemex doesn’t necessarily have the money for,” said Carla Gabriela Gonzalez, another former senior official at the hydrocarbon regulator.
“And that was where private companies added value: because they invested in exploration, and that investment cost the Mexican state nothing. Rather, these companies paid the Mexican state for the right to explore.”
Three Pemex engineers at the company’s exploration and production division and the engineer at the Ministry of Energy agreed that the state-owned company could benefit greatly from private sector participation.
“What we need is a large-scale exploration strategy, just like Petrobras had in Brazil, rather than a strategy focused on increasing refining capacities,” the Energy Ministry source said.
Pemex puts Sheinbaum in trouble: She has positioned herself as the guardian of her mentor’s nationalist legacy, which requires investment while others diversify into renewables.
Sheinbaum has proposed spending more on wind and solar infrastructure for electricity generation. Her plans for Pemex remain unclear and her team did not respond to a request for further comment.
With a PhD in energy engineering from the National Autonomous University of Mexico, Sheinbaum was one of the lead authors of the industry chapter of the UN Intergovernmental Panel on Climate Change in 2014.
One of Sheinbaum’s energy advisers said there would likely be some cooperation with private companies to increase exploration and production during her presidency, with preference given to companies already active in Mexico.
