In 1938, Mexico’s oil industry was nationalized with the formation of Pemex as the state oil monopoly. This arrangement would prove to be ingenuous beyond the founders’ imaginations, as Mexico became one of the world’s foremost oil producers over the next 65 years. However, it wasn’t until the mid70s, with the discovery of the Cantarell oil field, that Mexico’s petroleum business really hit its stride.
The Cantarell field turned out to comprise the second largest oil reserves in the world, behind the Ghawar field, in Saudi Arabia. This ushered in a boom era, the likes of which Mexico had never seen. Once a third-world banana republic, Mexico shot quickly into the ranks of the developed world, with its largest cities coming to rival those of first-world nations.
This tremendous upward mobility that the entire nation experienced would not have been possible without a nationalized oil sector. A large percent of those profits went directly to the state in the form of Pemex revenues and were spent on infrastructure and modernization, taking Mexico from dirt donkey trails to gleaming boulevards. The rest of the money largely went to contractors like Cotemar and the employees who labored there.
But by the mid-90s cracks started appearing in the well. The Cotemar field was losing the natural gas that provided the back pressure that drove the oil to the surface. This was temporarily solved with a cutting-edge technology called nitrogen injection. But by 2004, Mexico’s largest oil fields were falling into terminal decline.
By 2013, it had become apparent that, without drastic intervention, Mexico’s oil industry would collapse into oblivion. President Nieto signed in massive reforms that tore down Mexico’s protectionist, nationalized regime. What had worked so brilliantly during boom times became the industry’s Achilles heel as existing reserves required capital and expertise not on hand.
As Mexican petroleum moves towards a privatized future, Cotemar is in a highly favorable position to reap the rewards and add tremendous value to the global players like Exxon and Shell who will be the future general contractors on Mexican oil jobs.