New Business Expansion in Mexico Shale Play

Gustavo Hernandez, interim leader of Pemex's investigation and creation division, has a lot of motivation to be idealistic. Vitality changes introduced by President Enrique Pena Nieto a year ago could prompt another period of thriving investment for the populace of Mexico. The enactment affirmed a year ago put an end to a 75- year syndication on oil and gas creation and prepared for remote financing in the vitality division. After numerous noteworthy "false starts," little doubt remains that true change has come to Pemex and this time it is here to stay.
Hernandez estimates that the recoverable shale assets in Mexico at what might as well be called 60.2 billion barrels of oil. Nearly 60,000 wells will be needed for prospective shale oil and gas developments near the U.S border and Northeastern Mexico. Thus far only 20% of Mexico has been explored for potential reserves leaving much room for growth, expansion, and wealth.
Pemex was created in 1938 by President Cardenas is known as the state-owned petroleum company of Mexico. It was created to give exclusive mineral rights to the states and kept oil and production facilities in Mexico. There was an immediate boycott on Mexican oil from the international community and the private sector.
The impact of the countries oil and gas industry has been tremendous. One third tax revenues is due to the high taxation on PEMEX, 5% of the countries GDP is due in part from the projects and purchases of PEMEX. This past year they have set a budget of $27.7 billion in which 86% would be for exploration and production. Since there has been a downward stream of crude production it is noted that reform is needed. The times have changed drastically since the 1930’s when Mexico was second in world oil exports.
"We are now having vital talks with players in profound water, as well as it develop fields and different ranges in Mexico," Pemex Chief Executive Officer Emilio Lozoya said in a meeting on Feb. 17. The vast majority of the transient concentrate on oilfield improvement will be focused on full-grown fields. Lozoya is hopeful about the impact new organizations will have on creating failing to meet expectations fields and acknowledges this an essential venture in streamlining generation deliberations.
According to Lozoya, Mexico's shale reserves are the sixth-largest deposits in the world.
This means that foreign investment could help Pemex kick-start production efforts and expand their technical expertise in making use of these shale plays. The end goal for Pemex is to expand production to as much as 4 million barrels per day by 2025 with the collaboration of the private sector.
This comes at a crucial time as the EIA has predicted that the US crude production is to expand to 9.5 million barrels a day by 2016. If Canada, Mexico, and United States work together to expand their resources they could reduce costs, build the industry, and become the world’s cheapest source.
Mexico already has noticeable partnerships with Russia’s Lukoil, the FMC, and a joint venture with Seadrill. All of which are crucial for the expansion and growth of oil production in Mexico. These contracts could generate up to $1.8 billion! The expansion of PEMEX and these new avenues are creating new opportunities and horizons for Mexico’s economy and oil productivity.