BMI's Executive Summary

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The latest Mexico Oil & Gas Report from BMI forecasts that the country will account for 26.99% of Latin America regional oil demand by 2011, while providing 31.24% of supply. Latin America regional oil demand rose to an estimated 6.87mn barrels per day (b/d) last year. It should average 7.01mn b/d in 2007 and then rise to around 7.82mn b/d by 2011. Regional oil production was last year estimated at 10.97mn b/d. It is set to rise to 11.85mn b/d by 2011.

In terms of natural gas, the region last year consumed an estimated 183bn cubic metres (bcm), with demand of 271bcm targeted for 2011, representing 48% growth. Production of an estimated 191bcm in 2006 should reach 272bcm in 2011, and implies just 2bcm of net exports the end of the period. Mexico in 2006 consumed an estimated 30.05% of the region's gas, with its market share for 2011 forecast at 34.32%. It last year produced an estimated 22.51% of the region's gas, and is expected to be contributing 25.74% by 2011.

For the whole of last year, our estimates of average crude oil prices are US$61.10 for the OPEC basket, US$65.10 for Brent, US$66.20/bbl for WTI and US$61.30 for Urals. For the first quarter of this year, we have adjusted our forecasts to reflect the weather-induced volatility. The OPEC basket is now expected to have averaged US$54.30/bbl, with Brent at US$57.60; WTI averaging US$58.70 and Urals at US$54.00/bbl. Our projections for 2007 as a whole are barely changed from the last quarterly report.

We are still assuming an OPEC basket price average of US$55 per barrel. Based on last year's typical price differentials, this implies Brent at US$58.80, WTI averaging US$59.90/bbl, and Urals at US$55.30/bbl. Mexican real GDP growth is now forecast by BMI at 3.6% for 2007, down from an estimated 4.8% in 2006. We are assuming 3.6% growth in 2008, 3.5% in 2009, followed by 3.6% in 2010 and 3.7% in 2011.

Unless the government introduces a radical shift in energy policy, we expect state-owned Pemex to retain full responsibility for oil production, without international oil company (IOC) involvement. We are assuming oil and gas liquids production of no more than 3.7mn b/d by 2011, unchanged from this year's forecast level. Consumption is forecast to increase by less than 2% per annum to 2011, implying demand of 2.11mn b/d by the end of the forecast period. The export capability would therefore be approximately 1.59mn b/d by 2011. Gas production is forecast to increase from last year's estimated 43bcm to 70bcm over the period, with 23bcm of net imports required by 2011.

In the BMI Business Environment Ranking matrix, Mexico receives a lower composite score of 25, which now ranks the country equal eighth and last out of nine states included in the Latin America region, alongside Ecuador. The overall business environment can be considered highly unattractive in a regional context, thanks largely to the country's strict rules over upstream oil assets, refining monopoly and only restricted opening of the gas sector. Reserves have been depleted through under-investment, resulting in a low reserves-to-production ratio (RPR), while short- to medium-term volume growth prospects are only moderate. Long-term economic risk is perceived as being low.

Contents

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Chapter 1 - Executive Brief

Chapter 2 - SWOT Analysis

Mexico Economic SWOT

Mexico Political SWOT

Mexico Business Environment SWOT

Chapter 3 - Regional Market Overview

Latin America Region

Table: Latin America Oil Consumption (000b/d)

Table: Latin America Oil Production (000b/d)

Table: Latin America Oil Refining Capacity (000b/d)

Table: Latin America Gas Consumption (bcm)

Table: Latin America Gas Production (bcm)

Table: Latin America LNG Exports/(Imports) (bcm)

Mexico

Chapter 4 - Business Environment Rankings

Mexico

Latin America Region

Chapter 5 - Business Environment Ranking

Economics – Long-Term Risk

Politics – Long-Term Risk

Oil & Gas Growth

Oil/Gas Reserves

Licensing/Regulation

Competitive Environment

Chapter 6 - Business Environment Overview

Political Risk Summary

Economic Risk Summary

Business Environment Risk Summary

Legal Code/Corruption

Foreign Direct Investment

Tax Regime

Chapter 7 - Oil Market Outlook

Table: Crude Price Forecasts 2006

Revised Forecasts

Table: Oil Price Forecasts

Chapter 8 - Regional Supply and Demand

Latin America

Table: Oil Production (000b/d) – Latin America

Table: Oil Consumption (000b/d) – Latin America

Chapter 9 - Global Picture

Table: Global Oil Consumption (000b/d)

Table: Global Oil Production (000b/d)

Chapter 10 - Industry Forecast Scenario

Oil and Gas Reserves

Oil Supply and Demand

Gas Supply and Demand

LNG

Refining and Oil Products Trade

Revenues/Import Costs

Table: Mexico Oil & Gas – Historic Data & Forecasts

Other Energy

Table: Mexico Other Energy – Historic Data & Forecasts

Key Risks to BMI’s Forecast Scenario

Chapter 11 - Economic Outlook

Table: Economic Activity Indicators

Chapter 12 - Country Snapshot: Mexico Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Table: Wages per year

Chapter 13 - Regional Case Study

Investment Needed To Fulfil Venezuelan Potential

Strategic Vision

Export Commitments

Regional Position

Chapter 14 - Competitive Landscape

Executive Summary

Table: Key Domestic and Foreign Energy Players

Overview/State Role

Shell – Summary

Table: Key Upstream Player

RepsolYPF – Summary

Table: Key Downstream Player

Chevron – Summary

Petrobras – Summary

Total – Summary

Chapter 15 - Company Monitor

Petróleos Mexicanos (Pemex)

RepsolYPF Mexico

SWOT Analysis

Chapter 16 - BMI Forecast Modelling

How We Generate Our Industry Forecasts

Energy Industry

Cross checks

Sources

Chapter 17 - Appendix: Regional Demographic Data

Wages (ave per annum), US$

Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Network of Latin American Oil & Gas Sources

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BMI's Latin American Oil & Gas Reports are based on an extensive network of multilateral organisations, government departments, oil & gas industry associations, chambers of commerce and company reports. Information sources include: