Since the 2013 energy reform, Mexico has tried to combat the downward trend in hydrocarbon production.
However, according to Paul Alejandro Sánchez , an energy sector analyst, despite efforts to attract private investment between 2014 and 2018, the change in approach under the AMLO administration halted this progress. Sánchez noted that the National Hydrocarbons Commission (CNH) paused oil and gas bidding rounds before the previous president took office, but no new proposals were submitted, and everything focused on direct allocations to PEMEX, limiting development capacity.
This concentration of operations in a single company has led to a continued decline in production.
"Although PEMEX has invested, worked new fields and included condensates, production continues to fall," Sánchez commented.
Production, which at the beginning of AMLO's six-year term was 1.8 million barrels per day, is now at 1.4 million, far from his government's initial goal of reaching 2.5 or even 3 million barrels per day towards the end of his term.
This scenario reflects the limitations of public investment in increasing production.
Based on his experience, the analyst consulted believes that the country needs a multiple and small contract approach that allows various companies to develop Mexico's real resources, which are mainly located in the northeast of the country and require techniques such as fracking.
However, the outgoing government has shown a reluctance to implement this technology, which has reduced long-term growth prospects.
Regarding future projections, Sánchez does not expect a radical change in the current administration's strategy.
"The new director of PEMEX and the president of Mexico have indicated that they will continue along the same lines: development will take place through PEMEX and there will be no bidding rounds, but what there could be are incentivized contracts," he says.
However, this does not seem to be enough to reverse the trend.
"We could reduce the long-term outlook again, and I would add the fact that we do not have an adequate reserve replacement rate," he warns.
According to the analyst, the replacement rate of natural gas and hydrocarbon liquids reserves is well below expectations, leaving Mexico with a window of 8 to 10 years before reaching minimum production levels.
In this context, the announcement of Víctor Rodríguez Padilla as CEO of PEMEX included a mention of diversification towards electricity generation with solar and wind power and the development of green hydrogen.
In this regard, Sánchez noted that while PEMEX might be preparing for greater electrification of industries, this transition would not be immediate.
"If the decline in hydrocarbons continues, Mexico would be forced to move towards electrification, and that might make sense, but that doesn't mean we have the capacity to do it completely right now," he argued.
The analyst points out that Mexico has become the main importer of natural gas from the United States and one of the largest in volume worldwide.
"This means that even though we have resources, we are not developing them."
"So, if we continue with this logic, we will face increased imports," he added.
This situation complicates the outlook for a complete replacement of oil with cleaner alternatives, such as green hydrogen, which is still in a development stage and presents challenges for its integration into some industrial sectors.
Sánchez also does not see a total electrification of industries such as oil, cement or steel as viable in the short term.
"However, there are other industries that I do believe will gradually begin to electrify, and some are already very interested in implementing their own independent generation systems, such as isolated power plants or distributed generation solar panels," he said.
This part of the market could grow significantly in the coming years, as investments in renewable energy increase.
Regarding PEMEX 's idea of exploring other areas, such as offshore wind energy, Sánchez believes it is still far from becoming a reality.
" PEMEX does not have an internationalization strategy nor does it seek opportunities outside the country."
It's hard to imagine the company continuing to increase production without making radical changes.
Now, I don't see PEMEX becoming an offshore wind company in the short term because developing these types of systems isn't cheap, and the problem remains the same: we have great wind potential in Tamaulipas, but it's not being developed because there isn't enough infrastructure to evacuate the electricity.
Financial challenges would also present a major obstacle to the future of the energy sector.
"Money is needed for everything, and if there are no radical changes in the way PEMEX operates, in the businesses it runs, in the number of personnel it has, in the financial structure it manages, everything we do will end up the same," Paul Sánchez stated.
Without an appropriate investment strategy, Mexico risks missing out on the opportunity to take advantage of its resources, as projected since 2013.
"At some point, without new investments, we will be left without the possibility of taking advantage of our resources," he concluded.