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Mexico is looking to enhance its energy ties with India through greater participation of Indian companies, especially in meeting its gasoline deficit.
The Latin American country will conduct its first shale auction in September, but before that it will carry out another round of auction of onshore conventional blocks in July, in which Indian companies are likely to take part. Mexico is among the top five crude oil suppliers to India.
In an interview with Business Standard, Aldo Flores-Quiroga, deputy minister for hydrocarbons, Mexico, said, “Indian companies can participate in the full value chain. We have investment requirement in upstream, mid-stream and downstream. Mexico has opened up the sector through a competitive and transparent process.”
Mexico’s shale blocks are in Burgos Basin, in the northwestern border state of Tamaulipas, where state-owned oil company Pemex has drilled some 20 exploratory wells. The Mexican basin is considered an extension of America’s Eagle Ford basin, which revolutionised shale gas and oil production. Flores-Quiroga said Mexico was a net importer of natural gas and gasoline (petrol). “Mexico is the sixth largest market for petroleum products in the world, and it imports 60-70 per cent of its gasoline requirement. So there is an opportunity for investment,” he said.
Almost three years ago, Mexico started opening up the oil sector after 60 years. “Response from inside and outside Mexico has been amazing. We had one company that was in charge of the full value chain. Now, we have over 150 national and international companies in the oil sector. Those companies have announced investment commitment close to $200 billion so far, of which $150 billion is in upstream,” he said, adding, “Should they reach the commercial stage, we will see $150 billion invested over the life of project.”
The minister said it was a similar story in the mid and downstream sectors. Its natural gas market has over 60 registered participants and 24 companies engaged in daily transactions. “The gasoline market, where we would like India to participate, has also been transformed. We had one gasoline brand, now we have 40,” he said.
The country, he said, still needed to “find depth in storage and distribution segment”. “We have a lag in the energy infrastructure. With this opening, we expect to see more investment to improve the logistics segment.”
Entering the Mexican market, however, could be tricky, as a change in the political regime is scheduled for July. The front-running Left leaning party said it would review the liberal investment policy in the oil sector. The deputy minister, nonetheless, ruled out any change in policy, stating it was supported by the country’s constitution. Besides, there are independent trade commissions.