Mexico’s energy reform programme will manifest itself very clearly in a significant drop-off in its annual oil exploration spending, much of it offshore, according to Bloomberg.
But that shouldn’t mean less exploration in Mexican waters (or inland).
Energy reform for the country means moving away from a largely state-controlled model in which Pemex has dominated, to a shiny new privatized and liberalised model in which, for the first time in 77 years, foreign producers will be allowed to participate.
A cut of $4.1bn this year means state spending on exploration will be the lowest in nine years. The plan is that eventually outside operators will take up the slack.
And the new circumstances are forcing Pemex to court overseas partners. That process will accelerate, too, as national President Enrique Pena Nieto announced that Mexico would reduce its investment in Pemex by 20% in 2016.
Even though early auctions for offshore rights have not attracted the number or size of bids the government wanted, it has tweaked bid requirements and is optimistic interest will grow in future auctions.