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Mexico Oil and Gas Report Q2 2012

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					Mexico Oil and Gas Report Q2 2012
Published : June 2012                 No. of Pages : 75                Price:US$1175




BMI View: We expect Mexico to slow the rate of production decline that has plagued its vital oil sector
over the short term, but that the downward trend will persist without new discoveries or further sector
reform – potentially seeing the country turn into a net oil importer by the end of the decade. The Calderon
administration has had some success pushing through liberalisation measures but has not gone far
enough. With the favoured candidate in the upcoming 2012 elections, Enrique Peña Nieto, advocating
further reforms, the elections could prove a crucial turning point for the sector.

Gas output is forecast to remain essentially flat over the coming years. Gas production is forecast to
expand from 46.80bn cubic metres (bcm) in 2011 to 49.41bcm in 2016. This will do little to reduce import
needs, however, as consumption is forecast to rise rapidly from 61.29bcm in 2010 to 76.62bcm in 2016,
implying an import requirement of nearly 30.00bcm by 2016, about double the 2011 import requirement.
The long-term forecast for Mexico’s oil sector is dire. Oil production is seen continuing its downward
spiral, falling to under 2.50mn b/d in 2018 before reaching 2.23mn b/d in 2021. Meanwhile, a healthy
economic growth outlook is expected to see consumption rise by between 1-2% per year. That trend sees
consumption exceed production for the first time in 2019, with an implied net import requirement of nearly
300,000b/d by 2021.

Mexico holds seventh place, behind Venezuela, in BMI’s Risk/Reward Ratings (BERs), which combine
upstream and downstream scores. Despite being one of the region’s largest oil producers, the country
now sits in ninth place in BMI’s updated upstream ratings. It lags well behind Bolivia and Ecuador, thus
making it unlikely to move further up the league table over the short term. Although the absolute resource
base may be large, the output growth outlook is poor, reserves-to-production ratios (RPR) are low, state
ownership of oil assets is absolute and country risk is relatively high. Mexico ranks fourth in BMI’s
downstream ratings, reflecting its high levels of oil and gas consumption, refining capacity and moderate
country risk, plus low levels of projected oil and gas demand growth. Colombia is just one point behind
Mexico and could mount a near-term challenge.

Mexico’s dependence on energy prices leads to high volatility in the country’s export revenues. Our
anticipation of slower growth in China, a faltering recovery in the US and further uncertainty with regard to
the eurozone debt crisis, clearly pose a threat to global demand. As a result, we assume OPEC basket oil
prices to fall from US$107.52 per barrel (bbl) in 2011 to US$99.38/bbl in 2012, thus creating downside
risk for the Mexican macroeconomic outlook.

Mexico Oil and Gas IndustryQ2 2012

Table of Content

BMI Industry View 5
SWOT Analysis . 7
Mexico Oil and Gas SWOT 7
Global Energy Market Outlook 8
Libya Production Update: Main Fields (As Of Jan 9) ... 9
Global Oil Consumption, 000’s B/d, 2009-2016 .. 11
Global Oil Production, 2009-2016 .. 13
Regional Energy Market Outlook .. 14
Mexico Energy Market Overview .. 18
Table: Upstream Projects Database 21
Industry Forecast Scenario ... 22
Oil And Gas Reserves ... 22
Table: Industry Summary Data, 2009-2016 . 23
Table: Industry Summary Forecasts, 2014-2021 . 25
Oil Supply And Demand 27
Gas Supply And Demand .. 29
LNG .. 30
Refining And Oil Products Trade .. 31
Revenues/Import Costs.. 32
Oil And Gas Infrastructure 33
Oil Refineries 33
Table: Refineries In Mexico . 33
Service Stations . 35
Oil Storage Facilities 35
Oil Terminals/Ports .. 35
Oil Pipelines . 36
LNG Terminals . 36
Table: LNG Import Terminals In Mexico . 36
Gas Pipelines 38
Regional and Country Risk/Reward Ratings ... 39
Latin America Upstream Risk/Reward Ratings 40
Mexico Upstream Rating – Overview .. 43
Mexico Upstream Rating – Rewards 43
Mexico Upstream Rating – Risks . 43
Mexico Downstream Rating – Overview .. 43
Mexico Downstream Rating – Rewards ... 43
Mexico Downstream Rating – Risks . 44
Competitive Landscape . 45
Executive Summary ... 45
Table: Key Energy Player 45
Overview/State Role .. 46
Licensing and Regulation 46
Government Policy .. 49
International Energy Relations 50
Table: Upstream Player ... 51
Table: Downstream Player .. 51
Company Monitor ... 52
Petróleos Mexicanos (Pemex) .. 52
Repsol YPF Mexico .. 56
Shell – Summary .. 58
Chevron – Summary. 58
Petróleo Brasileiro – Summary 58
Total – Summary .. 58
Sinopec – Summary .. 58
Others – Summary ... 59
Service Companies ... 59
Table: Oil Consumption (000b/d), 2009-2016 . 61
Table: Long-term Oil Consumption (000b/d), 2014-2021 61
Table: Oil Production (000b/d), 2009-2016 62
Table: Long-term Oil Production (000b/d), 2014-2021 ... 62
Table: Oil Refining Capacity (000b/d), 2009-2016 .. 63
Table: Gas Consumption (bcm), 2009-2016 63
Table: Long-Term Gas Consumption (bcm) 2014-2021 ... 64
Table: Gas Production (bcm), 2009-2016 64
Table: Long-Term Gas Production (bcm), 2014-2021 . 65
Table: LNG Exports (bcm), 2009-2016 65
Methodology And Risks To Forecasts . 66
Glossary Of Terms . 67
Table: Glossary Of Terms 67
Oil And Gas Risk/Reward Ratings Methodology 69
Ratings Overview .. 69
Table: BMI’s Oil & Gas Business Environment Ratings – Structure ... 70
Indicators .. 70
Table: BMI’s Oil & Gas Upstream Ratings – Methodology 70
Table: BMI’s Oil & Gas Business Environment Downstream Ratings – Methodology 71
BMI Methodology ... 73
How We Generate Our Industry Forecasts ... 73
Energy Industry 73
Cross checks . 74
Sources . 74Table: Upstream Projects Database . 21
Table: Industry Summary Data, 2009-2016 . 23
Table: Industry Summary Forecasts, 2014-2021 . 25
Table: Refineries In Mexico . 33
Table: LNG Import Terminals In Mexico . 36
Table: Key Energy Player . 45
Table: Upstream Player . 51
Table: Downstream Player . 51
Table: Oil Consumption (000b/d), 2009-2016 . 61
Table: Long-term Oil Consumption (000b/d), 2014-2021 . 61
Table: Oil Production (000b/d), 2009-2016 . 62
Table: Long-term Oil Production (000b/d), 2014-2021 . 62
Table: Oil Refining Capacity (000b/d), 2009-2016 . 63
Table: Gas Consumption (bcm), 2009-2016 . 63
Table: Long-Term Gas Consumption (bcm) 2014-2021 . 64
Table: Gas Production (bcm), 2009-2016. 64
Table: Long-Term Gas Production (bcm), 2014-2021 . 65
Table: LNG Exports (bcm), 2009-2016 . 65
Table: Glossary Of Terms . 67
Table: BMI's Oil & Gas Business Environment Ratings – Structure . 70
Table: BMI's Oil & Gas Upstream Ratings – Methodology . 70
Table: BMI's Oil & Gas Business Environment Downstream Ratings – Methodology . 71

				
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Description: Gas output is forecast to remain essentially flat over the coming years. Gas production is forecast to expand from 46.80bn cubic metres (bcm) in 2011 to 49.41bcm in 2016. This will do little to reduce import needs, however, as consumption is forecast to rise rapidly from 61.29bcm in 2010 to 76.62bcm in 2016, implying an import requirement of nearly 30.00bcm by 2016, about double the 2011 import requirement.