How long will Mexico’s oil reserves last?

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Apr 142012

Mexico’s 3P (proven, probable and possible) reserves remained unchanged last year (2011) as new discoveries, mainly in the Chicontepec field, offset oil extraction. The Chicontepec field alone holds about 17,000 million barrels of oil equivalent (BOE), almost 40% of Mexico’s total 3P reserves of more than 43 million BOE (see graph). Mexico’s total 3P reserves are sufficient for about 32 years at current rates of extraction.

Mexico's oil reserves

Mexico's oil reserves have shown a steady downward trend until recently. Note: Green = Proven (Probadas), orange = Probable (Probables), yellow = Possible (Posibles)

Mexico has proven reserves of 13,810 million BOE, sufficient for 10.2 years. The size of these reserves compares favorably with proven reserves in the USA, which will last 11 years at current rates, or in the U.K. and Norway, where proven reserves will be exhausted within a decade.

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Mexico and USA sign agreement for development of Gulf of Mexico oil reserves

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Feb 272012

The USA and Mexico share the Gulf of Mexico, with periodic arguments about the precise offshore limits of each country’s jurisdiction. An earlier post includes a brief summary of the history of negotiations over this contentious maritime boundary:

The reason this boundary matters is because the deep waters of the Gulf of Mexico are thought to have massive deep-water oil and gas fields. The USA has encouraged major oil multinationals such as Shell and BP to explore relatively deep parts of the Gulf, those lying more than 500 meters or 1,640 feet below sea level.

location of doughnut holesDeveloping these fields requires advanced, specialist deep-water drilling techniques, which only a small number of major international (multinational) oil firms currently have the expertise to undertake. As was seen not long ago, accidents in these fields can be very difficult to avoid and any resulting damage very difficult to clean up:

The legal battle connected to that spill has been postponed; it had been due to start today (27 February 2012) in a New Orleans court. The April 2010 accident killed 11 oil workers and released up to 5 million barrels of oil into the Gulf.

In the Mexican sections of the Gulf of Mexico, very little oil exploration and development has yet been carried out. All oil exploration and development in Mexico is managed by state-owned oil giant Petroleos Mexicanos (Pemex), though they can contract other firms to undertake work on their behalf if or when needed. Pemex is the world’s third-largest oil producer and the largest contributor to Mexico’s federal budget. It is one of the very few oil companies worldwide that manages all aspects of the productive chain, from exploration to refining and marketing. Pemex has had more than its fair share of serious environmental issues:

Mexican experts believe that up to 29.5 billion barrels of oil might reside in Mexico’s share of the Gulf, but Pemex has little to show for almost a decade of deep-water drilling apart from some relatively minor gas finds.

A few days ago, Mexico and the USA finally signed an accord that, in the words of Mexican President Felipe Calderón, “ensures that each country can develop its corresponding oil and natural gas deposits in the trans-border area of the Gulf of Mexico.” In a joint formal statement, Mexico’s Foreign Affairs and Energy Secretariats said that the “historic” agreement “will generate the necessary legal certainty for the long-term development of resources that may be found in that area.” It remains to be seen just how quickly and efficiently Pemex can actually take advantage of the deep-water drilling opportunities that the new agreement is designed to safeguard.

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Unusual hazard: gasoline pours out of storm drains in Poza Rica, Veracruz

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Nov 262011

Recent floods in parts of the city of Poza Rica (Veracruz) resulted in an unusually dangerous situation. As groundwater rose following exceptionally heavy rains, a mixture of water and oil flowed out of some street drains.

street awash with oil photo

A Poza Rica street awash with oil and water. Credit: La Voz del Sureste

The precise cause is unknown. The city is blaming the state oil giant Petroleos Mexicanos (Pemex). Pemex claims that the hydrocarbons are natural tar, deposits of which underlie some parts of the region.

Whatever the cause, the flooding resulted in extremely hazardous conditions in the Chapultepec colonia, where Ébano, Nogal, Chopo, Eucalipto, Ciprés, Fresno and Sabino streets were badly affecfed, and in the Cazones colonia, where the aptly-named Pozo 13 (Well 13) was awash with oil. The mayor of Poza Rica was quoted as saying that “The rivers of crude left parked cars completely covered.”

Families living in the affected areas were evacuated temporarily for their own safety. Fortunately, local authorities, assisted by Environmental Protection officials and Pemex experts, were able to quickly bring the situation under control, without any loss of life or serious injuries.


  • Brota hidrocarburo de drenajes en Poza Rica (Diario La Voz del Sureste online)
  • Concluyen limpieza de derrame de hidrocarburo en Poza Rica (


Nov 162011

Mexico may have major reserves of petroleum but it lacks the necessary refining capacity to supply the domestic market with all the refined products such as vehicle fuels that its industrial, commercial and residential sectors demand.

As a result, Mexico has to import refined petroleum products, mainly from the USA. The high costs of these imports is a constant point of discussion in Mexico. If the country developed sufficient refining capacity, it could spend every dollar that currently goes on petro-based imports on something else, such as social services or infrastructure improvements.

Pemex imports. Credit:
Pemex imports, by month. Figures in millions of US dollars. Credit:

A small fortune is being spent each month on petroleum-related imports (see graph). Over the past year, the cost of imports has risen 12.3%. This is almost entirely due to higher oil prices on international markets; the volume of imports has increased only 1% over the period.

Imports of refined petroleum products will not end any time soon. Mexico does plan to build new refineries and expand its refining capacity, but they will take years to complete. Earlier this year, it was reported that Pemex engineers were adding the final touches to the blueprints for a new refinery in Tula (Hidalgo). Work began with the re-routing of existing irrigation channels and high tension power lines to take them well away from the site. It remains unclear, though, just how long it will take for this project to be completed.

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Gulf of Mexico energy reserves: updates in Mexico’s oil and gas sector

 Mexico's geography in the Press  Comments Off on Gulf of Mexico energy reserves: updates in Mexico’s oil and gas sector
Oct 252011

PEMEX awards first-ever contracts for the operation of oil fields.

In a move welcomed by international oil analysts, Pemex has awarded British company Petrofac Facilities Management Ltd. a contract to operate the Santuario oil fields in Tabasco. Prior to this contract, all oil field operations in Mexico since 1938 had been directly managed by Pemex.

Operations in two other areas – Magallanes and Carrizo – are also being contracted out. The areas cover 312 square kilometers between them, and have 3P (proven, probable, possible) reserves totaling 207 million barrels of crude oil equivalent. The contractual changes should attract considerable foreign investment in coming years, and are expected to play an important role in boosting national oil production from its current level of 2.5 million barrels a day.

Major natural gas discovery in the Gulf of Mexico

Pemex has announced that its Piklis 1 offshore well, located 150 km northwest of Coatzacoalcos in the Lakach field, has found a massive deposit of natural gas 5,431 meters below the water surface. The deposit holds more than 400 billion cubic feet of gas and, when production begins in 2014, it should yield 700-800 million cubic feet/day, reducing Mexico’s natural gas imports by up to 80% over the next 15 years. Compared to 2009, Pemex’s total revenues in 2010 rose 20.3% to 115 billion dollars, mainly due to high prices for petroleum and related products; export sales were 21.4% higher. Pemex is currently producing about 2.6 billion barrels of crude oil/day.

location of doughnut holes

How much does it cost to produce a barrel of oil?

According to Mexico City daily La Jornada, Pemex has maintained its enviable low costs per barrel of oil obtained (all figures in dollars):

  • 2006 $4.40
  • 2007 $4.90
  • 2008 $6.10
  • 2009 $4.90
  • 2010 $5.20

These costs per barrel are very competitive, and well below the costs recorded for other major firms as Total, BP, Exxon, Statoil, Chevron and Petrobras, who have production costs of between $6.10 and $10.00 a barrel.

Transborder oil fields

Several major oil and gas fields are known to straddle the international border in the Gulf of Mexico. Deepwater wells on the US side have already found massive deposits of oil, but, until recently, Pemex has not had the technology to drill in such deep waters. That is now changing. Pemex has begun drilling from the deepwater “Bicentenario” semi-submersible platform. The first well, Talipau-1, will descend 940 meters to the sea floor and then a further 5,000 meters into oil-bearing strata in the region known as the Cinturón Plegado de Perdido.

Pemex believes that deepwater wells in the Gulf of Mexico will eventually yield several billion barrels of oil.

The Bicentenario, built in South Korea, is capable of operating in water up to 3,000 meters deep; it is 100 meters in length, 78 meters wide and rises 138 meters above the surface, with a total weight of 58,000 metric tons. It will house up to 160 workers at a time.

In related news, bilateral talks were held in Washington DC at the end of August relating to offshore oil fields that straddle the Mexico-USA maritime boundary in the Gulf of Mexico. The talks will set the parameters for efficient and safe exploitation of these hydrocarbon reserves in the future. A formal agreement is expected to be completed before the end of this year.

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Examples of high risk settlements located near Pemex pipelines

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Sep 292011

There have been several fatalities associated with Pemex pipeline explosions in recent years, sometimes resulting from illegal attempts to tap into the lines. They include the disastrous blast in San Martin Texmelucan, Puebla, in December 2010 that killed 28 people. It therefore comes as something of a surprise to find press reports highlighting areas where people continue to live in vulnerable locations exposed to unacceptably high risks. In this post, we look at three examples, from the states of Oaxaca, Veracruz and Hidalgo respectively.

According to a report by Martha Izquierdo in Mexico City daily Reforma, more than 300 families in the industrial port of Salina Cruz (Oaxaca) live in homes sitting atop Pemex pipelines.

Previous municipal administrations are alleged to have issued permits for their construction, in total disregard for the potential dangers involved. The current municipal and state authorities have no plans to relocate these families, despite the daily risk they face. The pipelines carry oil into Pemex’s Salina Cruz refinery.

Pemex pipeline danger sign
Pemex pipeline warning sign. Credit Revista Buzos

The areas at risk are in the Deportiva, Hugo Mayoral, San Pablo Norte and San Pablo Sur districts (colonias) of Salina Cruz. Besides the homes, there are also vehicle repair shops, restaurants and even a shopping center in the zone along the pipelines.

In Coatzacoalcos, Veracruz, near another Pemex refinery called Pajaritos, a small town called Mundo Nuevo has sprung up to house construction and refinery workers. Its 20,000 residents live in close proximity to no fewer than 26 pipelines entering and leaving the refinery and, according to this report from  Jesús Lastra Ríos, they are not even certain of what materials are being carried in the pipelines, let alone their toxicity, flammability and explosiveness. In this case, apparently, the state “risk atlas” includes details of the pipeline diameters, but not their contents.

Clearly, settlements of any kind should not be allowed so close to Pemex pipelines, but there are many similar instances in Veracruz, as there are in many other states.

In Hidalgo state recently, the Education Ministry identified three schools as having been built “in high-risk areas near Pemex pipelines”. The state is making emergency plans to relocate the schools at an estimated cost of around $5 million. The schools are in the municipalities of Villa de Tezontepec, Ajacuba and Tlaxcoapan. The Hidalgo state government has a “risk atlas” covering landslide and other risks, but, apparently, most existing maps are based mainly on events that have already occurred.

These three examples serve to illustrate the seriousness of the situation in many parts of Mexico where planning restrictions have not been effectively enforced, and where risk assessments permitting accurate mapping of the most vulnerable areas have still not been completed and are therefore not available to municipal or state authorities.

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To read more about the geography of hazards in Mexico, use the “Hazards” tag:

Natural hazards in Mexico are discussed in detail in chapters 2, 4 and 7 of Geo-Mexico: the geography and dynamics of modern Mexico.

Mexico’s Pemex: the government cash cow that environmentalists love to hate

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Jul 252011

Petroleos Mexicanos (Pemex), the giant, state-owned petroleum company, is a symbol of national pride with revenues of over $100 billion in 2008. However, it is cash poor because most of its revenue goes to the government, covering 40% of the national budget. Pemex is $40 billion in debt and its maintenance budget is insufficient to keep its old infrastructure operating safely. About a third of Pemex’s 50,000 km of pipeline is over 30 years old and susceptible to failure.

Environmentalists love to hate Pemex because it has inflicted enormous environmental damage. The June 1979 blowout at the Ixtoc-I drilling rig in the Bay of Campeche resulted in the world’s second largest ever unintentional oil spill: over 450,000 tons, surpassed only by BP’s Deepwater Horizon, but more than ten times the size of the 1989 Exxon Valdez disaster. In November 1984 a series of explosions at a Pemex storage facility in San Juan Ixhuatepec in northern Mexico City started major fires killing about 500 people.

A massive gasoline leak into Guadalajara’s sewers in 1992 resulted in a series of explosions that resulted in over 200 deaths. In recent years numerous smaller, but still fatal, explosions and pipeline failures flooding rivers with oil have brought new attention to Pemex’s environmental damage and failing infrastructure.

cover of "como destruir el paraiso"

It has long been recognized that environmental damage is particularly severe near the conglomeration of Pemex facilities in southern Veracruz near the mouth of the Coatzacoalcos River. The river suffers from chronic heavy petroleum pollution, receiving massive doses periodically when pipelines break. Possibly the only beneficial outcome of the decades of widespread damage caused by Pemex in its principal areas of operation in Veracruz, Tabasco and Campeche was that it prompted the publication in 1983 of Cómo destruir el paraíso (How to destroy Paradise), a book which gave an immense boost to Mexico’s then fledgling environmental movement.

Federal environmental agencies have had only limited success in forcing Pemex to take corrective actions. Pemex recognizes the problems and applies each year for more maintenance funds from the government. The government, however, sets a higher priority on funding exploration since Mexico’s oil reserves are running out. Pemex is fundamental to the Mexican economy but needs investment in maintenance and must become more accountable for its environmental impacts.

Mexico’s environmental issues are analyzed in many chapters of Geo-Mexico: the geography and dynamics of modern Mexico, including chapter 30. Explore the book using’s Look Inside feature and buy your copy today!

Drug gangs diversify their business activities

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Jun 282011

Wise investors know that diversification is a sound way to protect their resources, and Mexico’s drug cartels have apparently been well educated in this regard. Recent news reports have highlighted two new ways in which Mexico’s drug cartels preserve and grow their wealth: the marketing of pirated merchandise, and the theft and sale of natural gas concentrates.

Marketing of pirated merchandise

According to an article originally published in the Dallas News, Mexico’s drug gangs now make almost as much money from pirated merchandise as from their trade in illicit drugs. By some estimates, the proliferation of pirated brand name goods has resulted in more than 450,000 manufacturing job losses and has caused the demise of many textile, clothing and shoe-making firms. Officials say that pirated videos account for as many as 9 out of every 10 movies sold across the country.

Pirated videos

"Almost original" DVDs for sale in Mexico

Theft of natural gas concentrates

Mexico’s giant Burgos natural gas field, which straddles the northern states of Tamaulipas, Nuevo León and Coahuila, lies in a zone which has become a center for violence in Mexico’s drug wars. Pemex, Mexico’s state-owned oil giant, claims that up to 40% of the gas concentrate produced has been stolen since 2006, as drug gangs have systematically targeted, kidnapped and intimidated oil workers. In some cases, cartels have even constructed their own pipelines to siphon off the gas, before filling their own tankers and driving them across the border using forged documentation.

Pemex has filed suit in Texas against eleven US firms (including Plains All American Pipeline LP, SemCrude, and Western Refining), alleging that they purchased up to 300 million dollars of fuel illegally acquired by drug gangs from Mexican pipelines and then shipped across the border. According to Pemex lawyers, the US firms may have been complicit in the forging of documents required for the gas concentrate shipments to cross the border, and profited (knowingly or unwittingly) from the trafficking of stolen fuel.

Previous posts about the geography of drug trafficking and drug cartels in Mexico:

Geo-Mexico: the geography and dynamics of modern Mexico discusses drug trafficking in several chapters. A text box on page 148 looks at trends in the drug trafficking business and efforts to control it. Buy your copy today to have a handy reference guide to all major aspects of Mexico’s geography!

How much longer will Mexico be an exporter of oil?

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Dec 152010

This interesting graph comes from a report published earlier this year by the Mexican Institute for Competitiveness (Instituto Mexicano para la Competitividad, IMCO). The purple line shows Mexico’s oil consumption in thousands of barrels/day from 2005 to 2009, with predicted values for the period 2010 to 2025. The yellow line shows Mexico’s oil production for the same period.

Graph of Mexico's oil production and consumption

Mexico's oil production (yellow) and consumption (purple), 2005-2025. Graph: IMCO.

Discussion questions:

  • In which year is Mexico’s consumption of oil predicted to equal its production?
  • What effects is this likely to have on Mexico’s economy?
  • What factors might cause this date to occur earlier than predicted?
  • What factors might cause this date to occur later than predicted?

A national map and summary of the methodology behind these rankings are provided in an earlier post:

For full details of the study:

Mexico’s economy and workforce are analyzed in chapters 14 to 20 of Geo-Mexico: the geography and dynamics of modern Mexico. Ask your library to buy a copy of this handy reference guide to all aspects of Mexico’s geography today! Better yet, order your own copy, which will still arrive in time for Christmas…

Mexico and USA agree to talk about oil rights in the Gulf of Mexico’s “Western Doughnut Hole”

 Books and resources, Mexico's geography in the Press  Comments Off on Mexico and USA agree to talk about oil rights in the Gulf of Mexico’s “Western Doughnut Hole”
Nov 152010

In 1970, the UN Law of the Sea Convention formally awarded each country the right to natural resources in its 200-mile (322 km) Exclusive Economic Zone (EEZ). Where claims overlapped, the Law of the Sea requires the competing countries to negotiate separate bilateral or multilateral agreements.

By 1979, the US and Mexico had agreed a treaty governing the basic delimitation of their respective EEZs. However, the treaty was never ratified by the US Senate. While the treaty had fixed seven points on the boundary, there were still two areas where the countries’ claims overlapped. The two portions were called the Western and Eastern Polygons (or Gaps), but were quickly nicknamed the Doughnut Holes. Together they straddle about 200 km of border.

The Western Doughnut Hole has a surface area of 17,467 square kilometers (6,744 square miles). The Eastern Doughnut Hole is about 20,000 square kilometers (7,720 square miles) and partially overlaps with the EEZ of Cuba.

location of doughnut holesTo date, no deposits of hydrocarbons have yet been found which straddle the maritime boundary, even though the Western Doughnut Hole is thought to hold untapped reserves of oil and gas. However, oil wells on one side of the boundary would likely extract some oil from the other side, hence the potential for conflict. In a parody of US politician Ross Perot’s famous 1992 line about the likely impact of the North American Free Trade Agreement (NAFTA) which would cause “a giant sucking sound” as US jobs moved south to Mexico, Mexican journalists have described the likely result of drilling in the Doughnut Hole as a “giant sucking sound” as US firms used their superior deep-water technology to suck up Mexican oil from the other side of the border.

Presidents Calderón and Obama agreed in May 2010 to extend the moratorium on any oil exploration drilling in the Western Polygon until January 2014, giving both sides time to hold joint discussions towards a permanent agreement.

The major oil spill from Deepwater Horizon has helped drive both governments to prioritize joint regulations governing oil and gas activities close to their shared border. Discussions are expected to cover not only deep water oil extraction, but also shallow water activities, including resources other than oil and gas.

For more details, see these two articles by Javier H. Estrada Estrada, Analitica Energética S.C.:

The changing political frontiers of Mexico are the subject of chapter 12 of Geo-Mexico: the geography and dynamics of modern Mexico. Oil reserves and exploitation are discussed in chapter 15.  If you have enjoyed this post, please consider purchasing a copy of Geo-Mexico so that you have your own handy reference guide to all aspects of Mexico’s geography.