Mexico City — Foreign direct investment (FDI) in Mexico’s oil and gas sector plunged in the first half of 2022, according to the most recent preliminary figures from the Economy Ministry.
Latin America’s second-largest economy recorded investment in oil and gas production totaling $278 million in the first six months of the year, a 63% drop compared to the same of period last year, when FDI totaled $753 million.
Although oil production in Mexico by private companies is at record levels of almost 100,000 barrels per day, Equinor and BP recently withdrew from hydrocarbon exploration and production in Mexico due to an adjustment in business strategy and the low probability of success in the areas they were awarded, respectively.
President Andrés Manuel López Obrador has criticized the performance of oil companies for their low investment and production failures, which have failed to meet half of their targets since the beginning of his six-year term.
He has said that his administration could cancel some contracts, but does not do so to avoid an “uproar”, despite the “speculation” in the Mexican industry with the oil and gas blocks awarded.
In contrast to the drop in investment in oil and gas, FDI in the country’s electricity sector increased by 4% to $623 million during the first six months of 2022, versus $598 million in the same period of 2021.
Mexico’s government has attempted to return control of the electricity sector to state-owned utility Comisión Federal de Electricidad (CFE) through multiple avenues and even by attempting to reform the Mexican Constitution, in a bid which failed after the proposed reforms were rejected by Congress.
Total FDI in Mexico
The preliminary figure for total FDI for the first half of the year is $27.51 billion, boosted by the merger between Televisa and Univision, and the restructuring of Aeromexico, and which is an increase of 49% over the first haflf of last year.
US companies accounted for 40% of the total, Canadian firms 10% and companies from Spain 7%.