Why Pemex offers “considerable opportunity” after Mexico’s reforms
Why Mexico's energy reforms are an opportunity for US investors (Part 13 of 13)
Foreign players swoop in
Pemex and Australia’s BHP Billiton Ltd. (BHP) have signed a memorandum of understanding and cooperation, or MOU, to exchange technical knowledge about the deepwater Gulf of Mexico. The shared knowledge will include information, experiences, and practices in activities related to the oil and gas industry.
Tim Cutt, BHP Billiton Petroleum and Potash president, noted, “We see considerable opportunity in Mexico following the recent economic reforms.”
Pemex is likely to increase its investment in 2014 to identify unconventional reserves. It will therefore look at tying in with other companies that would share their expertise.
ExxonMobil (XOM) also signed a similar agreement with Pemex to “analyze exploration, drilling and refining opportunities.”
Argentina’s YPF and Malaysia’s PETRONAS also show promise
Pemex also signed agreements with Argentina’s YPF SA (YPF) and Malaysia’s Petronas.
Emilio Lozoya, Pemex’s chief executive officer, said the agreements show the company’s keenness for new technologies, capital, and partners that will help it improve its oil and gas production.
The trio signed memoranda of understanding to foster co-operation and exchange expertise on deepwater, mature, heavy, and extra-heavy crude fields as well as, potentially, natural gas and infrastructure projects.
Miguel Galuccio, the CEO of YPF, said that the three companies together have the right skill set and could make a big impact in mature or shallow-water fields. Petronas, Galuccio said, is an offshore expert with deep pockets. YPF specializes in shale skills and also in squeezing more from declining fields. Pemex, on the other hand, is a shallow-water leader.
Midstream potential
Midstream is another area that might see investor activity. The energy reforms also remove Pemex’s monopoly over distribution and storage.
TransCanada Corp. (TRP) is already focusing on Mexico and has $1.9 billion in new natural gas pipeline projects underway. Read more about TRP here .
Other midstream companies whose pipelines have access to Mexico, or that are constructing pipelines to increase capacities, include Plains All American Pipelines LP (PAA) and Enterprise Product Partners (EPD). Both PAA and EPD are components of the Alerian MLP ETF (AMLP). TRP is a component of the Alerian Energy Infrastructure ETF (ENFR).
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