Abu Dhabi

Mexican government and oil industry officials have held informal discussions with Abu Dhabi National Oil Company (Adnoc) and Mubadala Petroleum to invest in Mexico’s oil industry.

Officials have so far briefed representatives from the two Abu Dhabi state-owned companies on the size of investment needed to revitalise Mexico’s ailing energy sector, said Francisco Alonso, Mexico’s Ambassador to the UAE, on Tuesday.

The briefing sessions took place before last week’s signing of a package of laws by Mexican President Enrique Pena Nieto aimed at luring billions of dollars of investment to the country’s oil, gas and electricity sectors.

The package of laws opens up the seven decade-long monopoly by Mexico’s two state-owned energy giants, Pemex, the national oil company, and CFE, the electricity firm, to new foreign and private investment opportunities.

Arjuna Mahendran, chief investment officer at Emirates NBD Wealth Management, said Mexico represents sizeable opportunity because traditional oil wells have been under exploited under the nationalised monopoly.

Mexico, the world’s 15th biggest economy and 10th largest crude oil producer, is opening its energy sector in a bid to rejuvenate the slumping economy. Pemex has already said it now expects oil output to increase to 2.8 million barrels per day (bpd) by 2018, according to reports. Mexico’s oil production peaked at 3.38 million bpd in 2004 but slipped to 2.52 million bpd last year.

Formal discussions between Mexico and the Abu Dhabi companies are likely to start next month when José Manuel Carrera Panizzo, chief executive of PMI Group, a Pemex affiliated company, visits the emirate as part of a Mexican government-led delegation.

An Adnoc spokesperson said “no comment” when asked about the prospect of partnering in the Mexican oil industry. Mubadala Petroleum could not be reached for comment.

Pemex has said that investment in Mexico’s energy sector could increase to $55 billion a year following the reforms, significantly higher than the current $27 billion.

Mexico’s oil industry is trying to lure partnered investments in shale and deep sea exploration and shallow-oil fields. Deep sea exploration has so far been relatively untapped due to a lack of technology, experience and investment.

Both Adnoc, through its subsidiaries, and Mubadala Petroleum have experience in offshore and onshore exploration and production. However, according to reports, Pemex has had contact with as many as 80 companies about possible partnerships.

While Mahendran said shale exploration could attract “cross border synergies” from the United States oil fracking industry.

Mexico’s Deputy Energy Secretary Lourdes Melgar recently said, around 30 per cent of additional production over a 15 year period could come from companies other than Pemex.