Mexico’s incoming President Claudia Sheinbaum faces significant challenges in achieving energy independence, a goal that led her predecessor to invest $17 billion in a new refinery. The country, a major crude producer, is experiencing a sharp decline in output from its aging oil fields, particularly in the Gulf of Mexico, which has fallen to its lowest levels in over four decades.
Without substantial investment in exploration and production, Mexico may soon find itself needing to import crude oil to support its expanded refinery capacity, a major shift for a nation that has long been a key global oil exporter. State-owned Pemex has struggled to meet domestic fuel demand due to outdated refineries that cannot effectively process the heavy Maya crude it predominantly produces, resulting in crude exports while importing gasoline and diesel, primarily from the United States.
Outgoing President Andres Manuel Lopez Obrador initiated the construction of a new 340,000 barrels per day (bpd) refinery in Tabasco to address the fuel supply shortfall caused by Pemex’s underperforming refineries. However, projections from the energy ministry indicate that this refinery may only temporarily alleviate the situation, as Pemex’s production is expected to decline rapidly after 2030.
Current projections suggest that production could peak at around 2.247 million bpd in 2028, but all scenarios indicate a swift decline thereafter. This decline could force Mexico to begin importing crude oil within the next decade to maintain refinery operations, reversing its long-standing position as a crude exporter.
Experts have raised concerns that the significant funds spent on the Olmeca refinery could have been better allocated to exploration and production efforts. The lack of investment in these areas has led to a decrease in proven crude reserves, which fell to 5.978 billion barrels earlier this year.
While Sheinbaum has expressed intentions to invest in renewable energy sources like wind and solar, her plans for Pemex remain unclear. There are indications that her administration may seek to collaborate with private companies to boost exploration and production, potentially easing the burden on Pemex.