A wealth of opportunity could be waiting south of the border after Mexican lawmakers voted Thursday to open the country's oil sector to private investment.
“I think it's a great thing for the overall concept of North American energy independence,” Continental Resources Inc. President Rick Bott said.
There are questions about how Mexico will welcome outside oil companies, but the resource-rich country remains alluring.
Mexico is one of the top suppliers of oil to the U.S. at more than 1 million barrels a day, but its production has fallen 25 percent since 2004, despite increased investment.
“The agreement with Mexico is a positive step,” American Petroleum Institute spokesman Carlton Carroll said. “The agreement would help U.S. oil and natural gas companies develop energy resources in the Gulf of Mexico and, in turn, create more jobs and enhance our energy security.
“The agreement also creates certainty for American companies looking to invest in new energy projects by establishing a process for managing oil and gas reservoirs along the boundary region in the Gulf of Mexico.”
Bott, who worked around the world before joining Continental last year, said the oil industry has had Mexico off its radar for years because of its state-run monopoly.
Bott said Mexico hasn't needed any outside investments in its oil industry because of its tremendous resources, but state-run Pemex has not been able to keep up with the oil boom in the U.S. and Canada.
State legislatures to vote on bill
Mexico's Congress voted Thursday to open the country's moribund state-run oil industry to private investment after a raucous, 20-hour debate over the most dramatic energy reform in decades. The 353-134 vote in the lower house all but guarantees that President Enrique Pena Nieto will achieve the crowning piece of his first-year reform package, allowing the government to grant contracts and licenses to private companies to explore and drill for oil and gas. Such oil contracts and licenses are currently prohibited under Mexico's constitution. The state-run oil company, Petroleos Mexicanos, or Pemex, has had a monopoly since the sector was nationalized in 1938, and the country's oil has been seen as a symbol of sovereignty ever since. The bill now must be approved by the legislatures of 17 of Mexico's 31 states. Opponents say they want to bring the reform to public referendum and fear that multinationals, especially from the U.S., will once again gain the sort of control they had over Mexico's oil before 1938.