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The last two years haven’t been kind to Mexico’s oil and gas sector. Oil prices hit records lows and Petróleos Mexicanos’ (Pemex) corporate debt has soared, all on top of a natural decline that has taken Mexican production to its lowest level in 30 years. For 2017, Pemex’s production forecast is at 1.92 million barrels per day (bpd), the lowest level since 1980, and production has been declining since 2004. This is attributable to the natural exhaustion of the once-abundant and easily-extractable Cantarell Field, and a lack of investment in new deepwater drilling technologies that might be access new, previously untapped fields.

In an attempt to stem this decline, Mexican officials have accepted the necessity of bringing back private capital and expertise. Since 1938, Pemex has controlled nearly every aspect of the nation’s oil production and distribution, but the government decided to end its monopoly in 2013, and last year opened bidding on both onshore and offshore fields.

The first-ever auction of Mexico’s largely untapped deepwater fields was held on December 5, five days after OPEC members agreed on a long-expected deal to curb the oil glut by removing 1.2 million bpd from the market. Almost overnight, the price of crude rose by 10%. And if the auction was a test of both Mexico’s ability to attract foreign capital and of wider global appetite for long-term gambles, then the country acquitted itself well. Mexico managed to secure bidders to eight out of ten offered blocks and struck a joint-venture with BHP Billiton for its Trion field, located just south of the Mexican-American maritime border. Should prices stabilize, similarly lucrative deals can be expected for 2017.

A few days later, a dozen non-OPEC states, including Russia, also agreed to slash or at least freeze production, improving Mexico’s prospects even more. And although Mexico won’t take part in the reduction effort because of its natural production decline, it will still benefit greatly by riding on the coattails of the subsequent rise in prices.

New investments are expected to impact production levels by 2022-2023, but the rise in prices from 2017 onwards will help Pemex bounce back from its precarious fiscal state and set the basis for a more promising future.

The United States imported over 670,000 bpd of crude and fuels from Mexico last August alone, according to the US Energy Information Administration. As Venezuela, another exporter Washington has traditionally purchased from, becomes more unstable, the US may need to rely even more on Mexico — border wall or no.

The next round of auctions is scheduled for March, when 15 shallow water exploration blocks will be put up for sale, and another will take place during the second half of the year. Nonetheless, success or failure in these auctions cannot solely be put down to Mexico’s best-laid plans. Whether oil producers, OPEC and non-OPEC both, are as good as their word is out of the country’s control, and this governs the prospect that current deals might be renewed. Another facet of this uncertainty is how competitive Mexico can continue to be when compared to other countries also seeking foreign extractive investment in the extractive sector — especially the US, whose maritime oilfields may soon be put in play as never before under President Trump’s lax environmental policies.

But Mexico presents a set of advantages that can sustain foreign interest. It has the US market right at its door, a privileged location for exports to the growing Asian market at a time when demand tilts heavily eastward, a relatively stable political environment in relation to many of its regional peers, and untapped wells that hold some of the world’s greatest oil frontiers.

The extent that President Donald Trump will put into practice his NAFTA-averse rhetoric remains to be seen. But there are two major reasons to believe that the Trump administration will not only refrain from restricting trade with Mexico, but might actually boost it.

The most important is the interest of American oil firms in their neighbor, which was recently on display during the auction round — they have a lot go gain by making inroads south of the Rio Grande. Mexico will be craving both upstream and downstream investments, and American firms are near-uniquely positioned to provide services, equipment and expertise. The fact that the US Secretary of State, Rex Tillerson, was ExxonMobil CEO until five weeks ago undoubtedly helps.

The two markets have also never been so intertwined. The United States imported over 670,000 bpd of crude and fuels from Mexico last August alone, according to the US Energy Information Administration. As Venezuela, another exporter Washington has traditionally purchased from, becomes more unstable, the US may need to rely even more on Mexico — border wall or no.

Despite these factors, some volatility in the energy sector may remain until cross-border policies have been consolidated, especially since deals between the US and Mexico involve multi-billion dollar decisions.

Pemex’s efforts at restructuring have started to pay off as markets have regained confidence in the company’s solvency — its risk decreased by 50% — and rating agencies have decided not to downgrade the firm. This year, the company plans on running its first primary surplus since 2014. For that to happen, 2017 will have to see more personnel dismissals and asset-selling. Pemex has already prepared for this by hedging its oil sales, and has been using repurchases to extend its bond maturities.

Pemex and its government backers still have a lot of work to do, from updating its ageing refineries that force the country to import more than half of its gasoline, to mitigating its soaring debt (currently at$100 billion excluding pension liabilities), to liberalizing a taxation regime that compromises investment and encourages political cronyism. Nonetheless, 2017 can very likely be a turning point for Pemex, and Mexico’s oil business as a whole.

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