Saturday, July 5, 2025

President’s chief of staff confirms deepwater reserves go to private sector

The federal government will cede the business of exploration and oil production in deepwater reserves to the private sector, presidential chief of staff Alfonso Romo said on Monday.

Romo’s remark, made at a business summit in Mexico City, confirms a report published in the Financial Times in late August that said that President López Obrador was poised to reopen private exploration in deepwater oil reserves in the Gulf of Mexico.

Romo also said the government will cede gas production to private companies.

The decision to allow private companies to resume deepwater exploration and production is a major reversal in policy direction for the government of López Obrador.

The president has been a staunch opponent of the previous government’s energy reform, which opened up the oil sector to foreign and private companies after almost 80 years of state control.

It was also intended to bring in expertise that state oil company Pemex did not have, particularly in deepwater drilling.

Pemex officials have said in recent months that the state-owned company would no longer invest in deepwater projects in order to focus on the development of onshore and shallow water reserves.

For private companies to resume deepwater exploration and production, the government will either have to hold new oil block auctions or enter into farm-out agreements. Pemex has already signed one deepwater farm-out agreement with the Australia-based mining multinational BHP.

The government’s apparent willingness to reverse its position and allow greater private participation in the oil and gas sector is welcome news for investors concerned about the slowing Mexican economy and stagnating investment.

According to the Financial Times report, López Obrador’s intention is to kick-start investment and production in the oil sector and prevent the possibility of another credit rating downgrade for the beleaguered state oil company, which has debt in excess of US $100 billion.

New oil and gas block auctions certainly could bring in significant investment to Mexico: one auction held in early 2018 attracted potential investment of almost US $100 billion.

Source: El Financiero (sp) 

Have something to say? Paid Subscribers get all access to make & read comments.
News quiz

The MND Quiz of the Week: July 5th

2
Floods, football and fiscal responsibility: Have you been following the news in Mexico this week?
Jake Paul points at boxer Julio César Chávez Jr

Boxer Julio César Chávez Jr., facing organized crime charges in Mexico, is detained by ICE

1
The former world boxing champion faces accusations of arms trafficking in connection to the Sinaloa Cartel.
people walk through mexico city with umbrellas, with the latin america tower in the backgound

An unusually rainy June brings drought relief and flooding to Mexico

4
Mid-way into the rainy season, Mexico's reservoirs are 45% full on average — a big improvement over last month, but still less than historical norms.
BETA Version - Powered by Perplexity