The decline in oil reserves and in output from the supergiant Cantarell oilfield sets new challenges for Mexico’s oil industry. Wide-ranging reforms are required, including ambitious new plans for Gulf of Mexico deepwater development. The Calderón government is giving priority to new infrastructure and to increasing Pemex’s capital expenditures, but it will be important for state-owned Petróleos Mexicanos (Pemex) to restructure thoroughly and for the Mexican energy industry to meet a wide range of challenges in order to supply domestic needs adequately and have a sustainable, competitive future.

Mexico—the sixth biggest oil producing nation in the world and one of the three main oil exporters to the United States—would appear to have reached a peak oil scenario in which oil output levels are likely to decline sharply in the near term. Meanwhile, the company, which enjoys monopoly status in the Mexican market, suffers from a crisis situation in many aspects, running from major indebtedness to corporate governance to aging infrastructure. The next Mexican president has a number of reform options to choose from, none of them easy.