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Mexico LatAm's most attractive oil and gas market -survey


Petroleumworld.com 02 06 2017

As Mexico moves forward with its energy reform and oil and gas auctions, the country has emerged as the most attractive E&P market for investment in Latin America, according to BNamericas' Oil and Gas 2017 Survey .

With its first deepwater auction in December having been deemed a success and a shallow water auction slated for June and two onshore auctions for July, the energy reform allowing private participation in E&P has focused investors' attention on Mexico.

Mexico was cited as the most alluring oil and gas market by 40% of survey respondents, with Colombia in a distant second place with 14%, Argentina with 12% and Brazil 10%, a sharp change from the first survey, carried out in 2011, when Brazil topped respondents' preferences, followed by Colombia and Peru.

Argentina also won out in terms of being the market perceived as having the best regulatory framework.

Around 63% of respondents saw Argentina as having the regulations best able to support unconventional resource development, compared with 10% for Colombia and a little over 8% for Mexico.

Respondents were also optimistic regarding their outlook for the region's oil and gas industry as a whole, with around 65% saying they felt that, over the next decade, Latin America will be increasingly important as a global oil and gas supplier, and nearly 70% said the region is a good place to be in the oil business.

But there is still room for improvement, with 60% of respondents saying that political, regulatory and business risks are such that their company needs higher-than-average returns on investment to justify making long-term investments in the region.

Companies are also expected to begin to fare better as a result of restructuring during the oil price slump, at the same time as prices begin to recover.

"Next year [2017] will be the year that we see the reactivation of activity in oil and gas, thanks to the vast majority of companies who have put in place adjustments that will allow them to enjoy a better price outlook," one survey respondent said, while 88% said average oil prices would be US$50-70/b this year.

Story by Adam Critchley from BN Americas

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