According to a recent article by S&P Global Commodity Insights, the upstream oil and gas activity in Mexico is anticipated to experience a slowdown in 2024. This situation has emerged as companies foresee limited new opportunities following the election of a new president in June. As the focus shifts away from Mexico, experts believe this could be a pivotal moment for Guyana to attract more investment in its expanding oil and gas sector.
Pedro Martínez, the head of aboveground risk at S&P Global Commodity Insights, talked about the shift in Mexico’s energy landscape. During the liberalization process under former president Enrique Peña Nieto, over 50 exploration blocks were awarded. However, almost 30 of these blocks have since been returned, a trend expected to continue into 2024. The underwhelming exploration results and the lack of new areas to explore compel companies to consider alternatives, with Guyana emerging as a viable option alongside Suriname and Brazil, Martínez said.
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The shift in Mexico’s energy policy under President Andrés Manuel López Obrador, who took office in December 2018, marked a departure from Nieto’s reform. López Obrador canceled oil and gas bidding rounds, fulfilling his campaign promise. The leading candidate in the upcoming presidential election, Claudia Sheinbaum, is projected to maintain this stance, as she belongs to MORENA, the party founded by López Obrador, S&P stated.
Óscar Ocampo, an energy expert at the Mexican Institute for Competitiveness, a public policy think tank, pointed out the logical consequence of companies renouncing acreage in Mexico. Ocampo pointed out that the lack of policy conducive to attracting capital for more upstream activity has diminished Mexico’s attractiveness, with countries like Guyana gaining interest.
This shift comes at a time when Guyana’s oil and gas sector is experiencing remarkable growth. Since the discovery of oil in 2015 at the Liza field, ExxonMobil has made over 30 discoveries in the Stabroek block. The company began production in 2019, and by the end of 2023, production exceeded 500,000 barrels of oil per day. Guyana aims to reach 1.2 million barrels per day by 2027/2028. Following its first offshore licensing round in 2023, Guyana announced that eight additional blocks would be awarded, with contracts expected to be finalized in early 2024.
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Mexico’s exploration peak occurred in 2021 with over 60 wells drilled, but projections for 2023 were less than 20. According to Vinicio Suro Pérez, vice president of the board of directors at Hokchi Energy, the expectation for private operators in Mexico is to drill only 10 exploration wells in 2024, S&P reported.
Daniel Enrique Guerrero Rodríguez, an independent consultant and former head of natural gas and petrochemicals at Mexico’s Energy Secretariat, suggested that the next administration might have to allow private companies back into the sector out of necessity to maintain production.
S&P Global expects Mexico’s crude production to stabilize in 2024 before marginally increasing to 1.84 million barrels per day in 2026.
