Country Report

Mexico risk profile

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27 September 2016

Mexico risk profile

Report summary

The oil industry is being transformed following the 2013 Energy Reform, which liberalised the sector. Mexico has large hydrocarbon potential, including deep water, tight oil, heavy oil and unconventional plays. Companies will be able to partner with state-owned Pemex or operate on their own in Round One, launched in 2015. While development risks are likely to rise as E&P activities pick up pace, the overall above ground risk profile is anticipated to substantially improve in the near term.

Table of contents

  • Executive summary
  • Political developments
    • Key Legislation
      • 2008 and 2013 Energy Reform
    • Reputational risk
    • I. Access Risks
      • 1. Ease of entry
      • 2. Fiscal system
      • Fiscal system - 0.5
      • 3. Contract sanctity
      • Contract sanctity - 0.0
      • 4. State presence
      • State presence - 0.5
      • 5. Regulation
      • Regulation - 0.25
      • 6. Corruption
      • Corruption - 0.75
      • 7. Geopolitics
      • Geopolitics - 0.25
    • II. Development Risks
      • 8. Labour activism
      • Labour activism - 0.5
      • 9. Natural hazards
      • Natural hazards - 0.25
      • 10. Civil unrest
      • Civil unrest - 0.25
      • 11. Security
      • Security - 0.75
      • 12. Environment
      • Environment - 0.25
      • 13. Supply chain
      • Supply chain - 0.25
      • 14. Local content
      • Local content - 0.25
    • III. Commercialisation Risks
      • 15. Infrastructure
      • Infrastructure - 0.5
      • 16. Fiscal stability
      • Fiscal stability - 0.0
      • 17. Pricing
      • Pricing - 0.25
      • As part of the 2013 Energy Reform, IOCs will be able to commercialise oil and refined product as they wish. Pemex's pricing formulas should remain unchanged, as they only apply to existing long term contracts with current clients. Depending on a project's partners, additional oil production could be priced in the spot market or used directly by the producer for refining. Mexico currently exports three types of oil-blends: Maya, Olmeca and Isthmus. The prices of these crudes are based on a formula that depends on the price of other international crude streams and a constant "k" factor of adjustment that is determined monthly by the Ministry of Energy (SENER) and the Ministry of Finance. Gas pricing is controlled by the Energy Regulatory Commission (CRE) and is determined by a formula that includes production and/or importing costs, transport and logistic costs. It is moving towards a more market-based system, pegged to the Henry Hub benchmark, A separate Mexico natural gas benchmark price is also a possibility. LNG import prices are indexed to Henry Hub. Most of Mexico's LNG is contracted by the public power utility (CFE) and this higher cost gas is largely passed onto the industrial sector. Separately, domestic prices of gasoline have historically been subsidised, but on 1 January 2015 these were adjusted upwards by 1.9%. While a strategy to liberalise prices with a managed float in 2016 backfired, full liberalisation of the gasoline price market is expected in 2018. In a similar regard, the government has sped up the liberalisation of the gasoline and diesel markets by allowing the private sector to import fuels beginning in April 2016 instead of January 2017 as originally planned.
      • 18. Currency risk
      • 19. Domestic market obligation
      • Domestic market obligation - 0.0
      • 20. Gas market access
      • Gas market access - 0.5
      • 21. OPEC compliance
      • OPEC compliance - 0.0
    • Mexico Risk Matrix - 2016
    • Chicontepec Basin assets
      • Access
      • Development
      • Commercialisation
        • Chicontepec Basin map
        • Perdido Area Basin assets
          • Access
          • Development
          • Commercialisation
            • Perdido Area Basin map
            • The Northern Basins assets
              • Access
              • Development
              • Commercialisation
                • The Northern Basins map

Tables and charts

This report includes 14 images and tables including:

  • Asset Risk Index (ARI) summary - 2016
  • Asset Risk Index (ARI) forecast - Mexico
  • Asset Risk Index (ARI) historical & forecast data – Mexico
  • Political map
  • Political facts
  • Oil supply-demand balance
  • Gas supply-demand balance
  • Key Ministries and Agencies
  • Risk matrix: Image 1
  • 2013 Energy Reform summary
  • Basin watch: Image 1
  • Basin watch: Image 2
  • Basin watch: Image 3
  • Location map

What's included

This report contains:

  • Document

    Mexico risk profile

    PDF 1013.35 KB

  • Document

    Research methodology country and asset risk.pdf

    PDF 251.22 KB

  • Document

    Mexico risk profile

    ZIP 1.10 MB

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