There’s lot to love about the Mexican economy. Juicy free-trade agreements, low wages and a close proximity to the United States and Canada are helping transform the nation back into an export powerhouse.
But Mexico’s economy is about to get a whole lot better. That’s because after nearly 75 years, Mexico might finally re-open up its abundant oil and natural gas assets to foreign energy firms.
Since 2004, Mexico’s overall crude production has fallen roughly 23% as the nation’s legacy wells are beginning to dry up. Giving new life to these old assets will require a dose of high technology and more complex drilling techniques — the kind that American energy firms have in spades. According to newly elected President Peña Nieto, foreign investment is the only way to increase Mexico’s production.
The opportunity could be huge: Mexico has 13.87 billion barrels of proven oil reserves according to data compiled by state-controlled oil firm PEMEX. But that number could be a drop in the hat, considering the country’s vast, unexplored regions which could see new life from hydraulic fracturing and shale-gas resources — to the tune of 460 trillion cubic feet. Deepwater drilling could add another 27 billion barrels of crude.
For investors, it could represent the untapped opportunity of a life time. That is, if they bet on the right firms.