Mexico’s oil production is expected to rise to 3.4 million barrels per day (mb/d) by 2040.
That’s an increase of 1mb/d from today, according to the International Energy Agency (IEA), which said although the country’s oil production has declined in recent years, it will “turn a corner” around 2020.
That is because Mexico’s energy reform, which began in 2013, allows new offshore developments, including deepwater drilling that helps restore Mexico’s position as a major global oil producer and exporter.
It is also expected to help revitalise its whole energy sector and boost the nation’s economy as it aims to open up key parts of the industry to new players, investment and technology.
The IEA also said Mexico’s auctioning system is boosting clean energy efforts in the power sector.
More than half of its new power generation capacity installed between now and 2040 is expected to be renewables. That will allow the country to reach its target of producing 35% of electricity from clean sources by 2024.
Without these energy reforms, oil production would be 1mb/d lower in 2040, electricity costs would be higher and household spending would be hit, the IEA states.
The cost to the economy would also be substantial, reducing the size of Mexico’s GDP by 4% in 2040, resulting in a total economic loss of $1 trillion (£0.81tn).
Fatih Birol, Executive Director of the IEA said: “This is not a reform, it’s a revolution on an unprecedented scale. This transformation touches every sector of the Mexican energy industry and goes well beyond. However, let’s not underestimate the task ahead. It is a huge undertaking and there will be challenges but the reform has made remarkable progress. The government’s path forward is the right one and the IEA stands ready to assist.”