Mexico Approves Fracking to Reverse Sagging Oil and Gas Production

Mexico Approves Fracking to Reverse Sagging Oil and Gas Production

Major U-Turn: Oil and Gas production by tapping more unconventional resources through fracking.

By Tsvetana Paraskova

In a major U-turn in energy policy, Mexico has unveiled a 10-year plan to reverse a years-long decline in oil and gas production by tapping more unconventional resources through fracking.

Petroleos Mexicanos, or Pemex, the world’s most indebted energy firm, has seen declines in its output in recent years as old shallow-water conventional fields mature.

Now the government and its state-controlled energy giant want to revitalize production via fracking, Reuters reports, citing the revitalization plan.

In the late 2010s, then-President Enrique Peña Nieto sought to open shale basins, including the Burgos Basin, a shale-rich basin in northeastern Mexico, for natural gas exploration and development by private companies.

However, Peña Nieto’s successor, Andrés Manuel López Obrador, cancelled the contracts. Former president Lopez Obrador ruled out fracking during his term in office between 2018 and 2024.

But his successor and mentee, current President Claudia Sheinbaum, has agreed to give the green light increased fracking despite a campaign pledge last year that she would not allow it.

“We’re going to address all the geological potential we have,” Reuters quoted Pemex chief executive Victor Rodriguez as saying during a presentation of the plan.

Pemex has been fracking onshore fields close to the Gulf of Mexico coast, but it does not report shale production separately and it is not clear how much the fracking has contributed to output. It’s clear that most of oil and gas production comes from conventional resources at old offshore platforms in shallow waters.

The steady decline in Pemex’s output and the tense trade and tariff relations with the U.S. has apparently prompted Mexico to expand domestic fracking in a bid to reduce its high dependence on natural gas imports from the United States.

Over the past decade, Mexican imports of U.S. natural gas, mostly via pipelines, have jumped thanks to new pipelines built between the U.S. and Mexico.

Mexico has an estimated 545 Tcf of technically recoverable shale gas resources, the sixth largest in the world, per U.S. government data.

By Tsvetana Paraskova for Oilprice.com

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