“The United States, Mexico and Canada can be the new Middle East of the world,” U.S. Rep. Henry Cuellar stated recently. However, the representative warned that if America isn’t careful, we could be side swiped by the oil appetite of China and other growing nations.
Cuellar’s remarks took place at a Wednesday morning event in Reynosa hosted by Mexico’s national oil company Petróleos Mexicanos (PEMEX), according to The San Antonio Business Journal. The Laredo lawmaker, whose congressional district includes parts of the Rio Grande Valley and San Antonio, warned listeners that if American companies fail to take advantage of Mexico’s energy reforms, China would do it for them. He noted that Mexico and the U.S. should be close partners and that America should take advantage of the opportunity in its own backyard.
“We have to make sure that we don’t wake up one day and the Chinese are across the river when we had an opportunity to work with Mexico,” Cuellar told the San Antonio Business Journal.
Just last year, Mexico opened the door for new energy markets in its nation to private investors. Many were hoping to see a boom in revenue by empowering Mexico to develop new fields and access innovative technology to reverse a decade-long slide in production. One area in particular is the region’s Eagle Ford Shale that geographically mirrors the shale play across the border to the North.
But, low oil prices came at the worst time for Mexico. Earlier this year, the Associated Press reported that Mexico’s government slashed $8.4 billion from its 2015 budget, with most of the cutbacks expected to come in the energy sector. The Mexican government relies on oil revenue for roughly a third of its spending and calculated this year’s budget based on an average price of $79 a barrel.
There are numerous American projects in the works, such as the $10 billion worth of electricity and natural gas infrastructure projects, including a gas pipeline under the Gulf of Mexico from Texas to the port of Veracruz. In addition, in May, Mexico’s oil sector regulator approved the call for bids for its next package of contracts covering 26 onshore areas. The bids, which spread across five states, totaled 2.5 billion barrels of oil equivalent (boe) in proven, probable and possible reserves.
Nonetheless, China is now the world’s largest oil importer according to the U.S. Energy Information Administration. With such a demand, China is on the hunt for any new sources of energy to fuel its growth.