Smaller Companies to Dominate Shale, Pemex Unit Director SaysEric Martin and Adam Williams
Smaller companies will probably dominate development of Mexico’s shale gas deposits as Petroleos Mexicanos focuses on shallow water and onshore projects, according to the independent director of one of the state-owned company’s units.
Pemex, as Petroleos Mexicanos is known, will probably focus on businesses with higher margins to maximize profits, leaving room for smaller companies in shale, Mario Gabriel Budebo, a director of Pemex Gas and Basic Petrochemicals, said at today’s Bloomberg Mexico Economic summit.
“It’s not the large companies that have the agility and the cost structure to exploit shale gas,” said Budebo, a former deputy energy minister. “It’s an area for new players.”
Emilio Lozoya, Pemex’s chief executive officer, on March 3 invited the world to explore for shale deposits in its recently opened energy sector. The crude production monopoly the company has held since 1938 ended on Dec. 20. Pemex aims to attract as much as $1 trillion in energy investment during the next decade to exploit the biggest proven oil reserves in Latin America after Venezuela and Brazil, he said.
A “big chunk” of investment in the sector may come from Asia, said Kent F. Moors, executive chair of the Global Energy Symposium. Finance Minister Luis Videgaray said in an interview today that Mexico’s government is working with China to have the world’s second-largest economy increase its investment across industries.
Videgaray helped shepherd the laws last year that opened the nation’s state-controlled oil industry to private drillers.
Victor Herrera, Latin American managing director at Standard & Poor’s, said in a Dec. 20 interview that pipeline and shale gas investment could come “very quickly.” Shale and natural gas are the “low-hanging fruit” of the energy reform and may be explored as soon as the second half of this year by foreign companies, according to Herrera.