The Mexico oil and gas market was valued at USD 185.46 billion in 2022 and is projected to grow at a compound annual growth rate (CAGR) of 3.4% from 2023 to 2030. This growth is fueled by several factors including government subsidies, the liberalization of fuel prices, and Mexico’s growing role in international natural gas trade—particularly in light of European shortages due to the Russia-Ukraine conflict.

In 2022, Mexico emerged as a promising hub for oil and gas in the North American region. The continent as a whole boasts extensive reserves of crude oil and natural gas, particularly under the Gulf of Mexico and within tight rock formations in Alberta, Colorado, Texas, and Central California. Since 2005, production levels have surged, thanks to the adoption of horizontal drilling and hydraulic fracturing by major energy firms.

The Mexican oil and gas industry operates across three primary segments: upstream, midstream, and downstream. The upstream segment includes exploration, development, production, and decommissioning. Activities such as geological surveys, land rights acquisition, and onshore/offshore drilling play a vital role in exploration, with technologies like seismic imaging and soil testing supporting these efforts.

Crude oil remains one of the most extensively traded commodities globally, and Mexico plays a significant part in this market, given its proximity to vast hydrocarbon reserves in the Gulf and other key North American regions.

However, the market has not been immune to challenges. The COVID-19 pandemic disrupted supply chains and triggered a sharp drop in demand. This imbalance led to an oversupply crisis, pushing prices into negative territory. On April 20, 2020, Mexican crude oil prices fell to a record low of -USD 2.37 per barrel.

Key Highlights

• Market Size (2022): USD 185.46 billion
• Forecast Period: 2023 to 2030
• CAGR (2023–2030): 3.4%
• In terms of revenue, upstream led the operations segment with a market share of 62.75% in 2022.
• The midstream sector in the country constitutes 69 natural gas processing facilities throughout 11 natural gas processing centers.
• The majority of the nation's natural gas distribution system is run by PEMEX.
• As of the end of 2021, Mexico's six refineries had a combined refining capacity of 1.6 million b/d.
• An estimated 38% average refinery utilization rate was recorded in Mexico in 2021.

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Competitive Landscape

The Mexican oil and gas market is highly competitive and consolidated, driven by the presence of numerous key players. A dominant strategy among companies is vertical integration, which enhances control over operations and reduces external market dependencies. Factors such as geopolitical developments, favorable regulatory frameworks, and advancements in R&D continue to shape the competitive dynamics.

In August 2022, BP p.l.c. announced plans to divest its oil assets in Mexico and shift focus toward renewable energy, citing both growth opportunities in renewables and political challenges facing the fossil fuel industry in the country.

Major Companies Operating in the Market

• BP p.l.c.
• Chevron Corporation
• Citla Energy
• Exxon Mobil Corporation
• Marathon Petroleum Corporation
• Petroleos Mexicanos (Pemex)
• SAIPEM SpA
• Sempra
• Shell International B.V.
• TotalEnergie

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Conclusion

The Mexico oil and gas market is steadily expanding, driven by favorable government policies, regional energy demands, and its strategic geographic location within North America. Despite facing short-term challenges such as pandemic-related disruptions and fluctuating global prices, the industry is poised for sustained long-term growth. The integration of advanced drilling technologies and a shift toward renewable strategies among key players further signal an evolving energy landscape in Mexico.