North America to Drown in Oil as Mexico Ends Monopoly

[Purveyor]

By Joe Carroll and Bradley Olson - Dec 16, 2013

The flood of North American crude oil is set to become a deluge as Mexico dismantles a 75-year-old barrier to foreign investment in its oil fields.

Plagued by almost a decade of slumping output that has degraded Mexico’s take from a $100-a-barrel oil market, President Enrique Pena Nieto is seeking an end to the state monopoly over one of the biggest crude resources in the Western Hemisphere. The doubling in Mexican oil output that Citigroup Inc. said may result from inviting international explorers to drill would be equivalent to adding another Nigeria to world supply, or about 2.5 million barrels a day.

That boom would augment a supply surge from U.S. and Canadian wells that Exxon Mobil Corp. (XOM) predicts will vault North American production ahead of every OPEC member except Saudi Arabia within two years. With U.S. refineries already choking on more oil than they can process, producers from Exxon to ConocoPhillips are clamoring for repeal of the export restrictions that have outlawed most overseas sales of American crude for four decades.

“This is going to be a huge opportunity for any kind of player” in the energy sector, said Pablo Medina, a Latin American upstream analyst at Wood Mackenzie Ltd. in Houston. “All the companies are going to have to turn their heads and start analyzing Mexico.”

Unprecedented Output

An influx of Mexican oil would contribute to a glut that is expected to lower the price of Brent crude, the benchmark for more than half the world’s crude that has averaged $108.62 a barrel this year, to as low as $88 a barrel in 2017, based on estimates from analysts in a Bloomberg survey. Five of the seven analysts who provided 2017 forecasts said prices would be lower than this year.

more...

http://www.bloomberg.com/news/2013-12-16/north-america-to-drown-in-oil-as-mexico-ends-monopoly.html

[Taitertots]

1. Great for billionaires, a slap in the face to the average Mexican

More oil comes out, but less money is going to come back to Mexico. They are essentially giving away their vast resource wealth for pennies on the dollar.

[Laelth]

2. k&r for exposure. n/t

-Laelth

[CFLDem]

3. Cheaper gas?

Yes, please!

[Incitatus]

4. I'm not sure about that.

"With U.S. refineries already choking on more oil than they can process,"

There might be a supply and demand issue due to the lack of refinery capacity. Cheaper oil for the refineries/gas companies doesn't necessarily mean cheaper gas for us.

Maybe there is some collusion going on here. idk

[CFLDem]

5. Once again we shoot ourselves in the foot.

(Although I think this will keep gas from going any higher)

[Zorra]

6. What a shame. Mexico never seems to stop going from really bad to much worse, year after year. nt