After generations of state control, Mexico’s vast oil and gas reserves will soon open for business to the international market.
In December 2013, Mexico’s Congress voted to break up the longstanding monopoly held by the state-owned oil giant Petroleos Mexicanos — commonly called Pemex — and to open the nation’s oil and gas reserves to foreign companies.
The constitutional reforms appear likely to kickstart a historic hydraulic fracturing (“fracking”) and deepwater offshore oil and gas drilling bonanza off the Gulf of Mexico.
“This reform marks a major breakthrough in Mexico’s economic history only comparable to the signing of the North America Free Trade Agreement (NAFTA) in 1992,” international investing and banking giant Banco Bilbao Vizcaya Argentaria (BBVA) wrote in a January 2014 economic analysis.
What does this mean for the oil and gas industry in Mexico? And for the workers and those who live above these oil and gas plays or along the pipeline routes that will funnel the liquids to refineries? And how about for the Earth’s atmosphere?
Can Mexico’s fossil fuel infrastructure handle the boom? Can the country spare the precious freshwater supplies needed for thirsty fracking operations in an era of increasingly severe droughts and drinking water shortages? Can environmental, safety and public health regulations possibly keep up with this industrial boom?
DeSmogBlog will examine all these issues and more as Mexico opens its fossil fuel reserves to international exploitation in the weeks and months ahead. But, first, an overview of the state of play in Mexico’s energy reforms.