Petroleum industry in Mexico
The
The petroleum sector is crucial to the
History
Development of the oil industry in Mexico before 1938
Petroleum was known in Mexico before the arrival of the Spaniards and used by the natives for incense and to repair canoes.[4] In Mexico's colonial era (1521-1821), ranchers lost cattle to tar pits in the Gulf Coast Region,[5] so it was considered more of a hazard than a valuable resource. Exploratory wells were first drilled in Mexico in 1869 by U.S. entrepreneurs.[5] In 1846, the first modern oil well in the world was drilled in the South Caucasus region of Russian Empire, on the Absheron Peninsula north-east of Baku (in settlement Bibi-Heybat).
Development of petroleum took place as Mexico's railway system was developed in the 1880s and 1890s, allowing petroleum to reach export markets; before that there was no internal market for Mexican petroleum and no way for petroleum to be easily exported.[5] By 1901, commercial production of crude oil in Mexico had begun. California oil entrepreneur Edward L. Doheny opened the Ebano oil field along the Mexican Central Railway.[5]
In 1889, the Veracruz legislature passed a law titled Ley sobre subdivision de la propiedad territorial, under which the state gave land titles to private owners. The privatization of land allowed state to declare any land that was not privatized to be public land. In 1883, the Mexican Congress passed the Ley de Colonización, which allowed private land companies to survey public lands for the purpose of subdivision and settlement. For their work surveying this public land, the company would receive one-third the surveyed land, and gave them the opportunity to buy the remaining two-thirds at a very low cost.[6] This allowed more than 132 million acres of Mexican land to be owned by the surveyors. By the early twentieth century the reapportionment was complete.[6] The law divided former communal land and large estates into small, privately owned lots. Dealing with private landowners made it easier for foreign oil companies to buy or lease oil property. Many property owners considered the up-front bonus they received for leasing their property to be “easy money.” A typical oil lease allowed the property owners remain on the land; if the company did not start producing oil from the land within the term of the lease, commonly five years, the company would leave, and the owner still had the lease bonus money.[7]
July 1908, British entrepreneur
This further fueled a massive land rush by the foreign oil companies. The two main companies Edward Doheny's Huasteca Petroleum, and Weetman Pearson's El Aguila were able to secure a large sum of land rights through ownership, and leasing. By 1922 Huasteca petroleum owned or leased 1,223,780 acres, and El Aguila 1,890,286 acres of land respectively.
Article 27 of the
In 1925, President Plutarco Elías Calles decreed that foreign oil companies must register their titles and limited their concessions to fifty years.[15]
Starting in 1918 and extending into the 1920s, Mexico was second behind the United States in petroleum output and led the world in oil exports. Oil production and exports from 1921 to 1925 were at historic high levels. In 1921, production was, in barrels of 42 gallons each, 193 million, with exports of 172 million. Production and exports declined each year through 1925, when production was 116 million, with exports of 97 million.[16] In 1926 production dropped below 100 million barrels, and in 1942, net exports dropped below 10 million barrels.[16]
In the 1930s, as a consequence of worldwide economic depression, the lack of new oil discoveries, increased taxation, political instability, and Venezuela's emergence as a more attractive source of petroleum, output fell to just 20% of its 1921 level.[17] Production began to recover with the 1932 discovery of the Poza Rica field near Veracruz, which would become Mexico's main source of petroleum for the next several decades.
1938 expropriation
The expropriation of lands by the Mexican government started with the ratification of the Mexican constitution of 1917. By nationalizing the land, Mexico and the people would be better able to control working conditions, pay, and environmental impact. However, this expropriation of land further marginalized the indigenous population.
In 1935, all companies in the business of oil production in Mexico were foreign companies. Labor practices in these companies poorly benefited the workers since the companies were able to block the creation of
"Faced with political difficulties in Mexico, as well as the intrusion of saltwater into some of the major producing field, the United States and other foreign oil companies began to seek other sources of supply particularly in Venezuela, and interest in the middle east intensified as well."[18] Foreign oil companies continued to pump as much oil as quickly as possible for exportation, until the Mexican expropriation in 1938, “Ignoring reasonable conservation measures to export as much oil as quickly as possible”.[19] “Mexico only found itself compelled by the rebellious and defiant conduct of the oil companies that is decreed the expropriation of their properties.”[20] The United States refusal to recognize and work with Mexico's post-revolution government, along with a very hazardous work environment that lead to workers strikes and revolts, forced the Mexican government to expropriate the land.
On March 18, 1938, Mexican President
On June 7, 1938, the state-owned company Petróleos Mexicanos (or "Pemex") was founded, with exclusive rights over exploration, extraction, refining, and commercialization of oil in Mexico.
International reaction to expropriation
The British government demanded immediate compensation for the Mexican Eagle Petroleum Company. However, the company had been founded as a Mexican company under Mexican law. Therefore, the British government couldn't intervene directly in the company's favor.[21] Diplomatic relations between the countries were soon broken, but not before Mexico paid a debt claimed by the British government for damages caused during the Mexican Revolution.[22]
The government of the
Negotiations with the United States went differently. During Cárdenas's speech, he claimed that the resources in the subsoil belonged to the Mexican nation, and therefore would not be considered as part of the compensation to foreign businesses. The companies, however, assumed compensation should include the fuel that was estimated to be found in the soil. President Franklin D. Roosevelt in a public speech recognized the right of Mexico to expropriate the oil properties and agreed to accept compensation for the properties of the companies excluding underground oil.[24]
Boycott
In retaliation for the expropriation,
Soon after, students at the Instituto Politécnico Nacional and the National Autonomous University of Mexico were able to synthesize tetraethyl lead, a popular gasoline additive at the time used for boosting octane ratings. Gradually, companies that sold parts and equipment gave in as Mexico opted to buy from Germany, Italy and other European countries.[28]
The U.S. State Department assisted with the boycott in various ways. Purchases of Mexican silver were suspended, which represented an average amount of $30 million annually, although after 1938 sales were resumed in smaller quantities and lower prices.[25] In the United States, government departments prohibited the use of Mexican fuel. Preference was given to the importation of Venezuelan oil. The import tax for Mexican oil increased from 15 to 50 cents on the dollar while Venezuelan oil was only taxed at 25 cents. Shipping agencies were pressured not to transport Mexican oil.[29]
World War II
In 1938, Mexico had voted during the Pan-American Conference in favor of establishing continental solidarity against non-American and non-democratic influences, an allusion to the governments of Adolf Hitler, Benito Mussolini, and Hirohito. Nonetheless, owing primarily to the boycott, Mexico maintained economic and commercial relations with these countries.[30] Gradually, commercial and diplomatic relations between Mexico and Germany and Italy deteriorated. After the Japanese attacked Pearl Harbor in 1941, Mexico cut diplomatic ties with Germany and Italy.
Cárdenas's hand picked successor,
Post-nationalization
Between 1938 and 1971, Mexico's oil output expanded at an average annual rate of 6%.[33] In 1957, Mexico became a petroleum net importer after domestic demands exceeded domestic production. However, production rose to 177 million barrels (28.1×10 6 m3) by 1971 with the exploitation of new oil fields in the isthmus of Tehuantepec and natural gas reserves near the northeastern border city of Reynosa, but the gap between domestic demand and production continued to widen.
1973 witnessed Mexican oil production surpassing the peak of 190 million barrels (30×10 6 m3) achieved in the early 1920s. In 1974
From 1977 to 1980, Pemex received $12.6 billion in international credit, representing 37% of Mexico's total
By 2007, Mexico had a net oil export of 1.756 million barrels per day (279.2×10 3 m3/d).[34]
In early 2008 the
Oil production
Mexico produces three grades of
The "South Zone" for Pemex includes the states of Chiapas, Tabasco, Campeche, Yucatán, Quintana Roo and the southern portions of Guerreo, Oaxaca and Veracruz with exploration beginning in 1863 with Father Manuel Gil y Sainz's San Fernando Mine near Tepetitan Town, Tabasco, Dr. Simon Sarlat's well in 1883, and commercial production from the Capoacan and San Cristobal oil fields in 1905 and 1906 respectively.
In 2002, the
Annual production has dropped or failed to increase each year since 2004.[45] Furthermore, it has been reported the 2005-2006 daily oil production was down by approximately 500 thousand barrels per day (79×10 3 m3/d) on the previous year. Nevertheless, Mexico still produced approximately 2.98 million barrels (474×10 3 m3) of oil per day (2010 est.) ranking it seventh in the world in terms of total production.[46]
Year | Oil Production | Rank | Percentile Change | |
---|---|---|---|---|
million barrels per day | thousand cubic meters per day | |||
2003 | 3.59 | 571 | 5 | N/A |
2004 | 3.59 | 571 | 5 | 0.00% |
2005 | 3.46 | 550 | 5 | -3.62% |
2006 | 3.42 | 544 | 6 | -1.16% |
2007 | 3.50 | 556 | +2,3% | |
2009 | 3.00 | 477 | ||
2010 (est) | 2.98 | 474 | 7 | -0,1% |
2011 (est) | 2.5 | 400 |
Environmental impacts
Beginning with the desire for gold and silver in the sixteenth century, both foreign and domestic powers have mined the landscape of Mexico for natural resources and precious goods with a primarily financial focus and not an environmental one. The original
Although the most popular incident in the public's mind concerning oil accidents is the
Since the initial surge of oil drilling in 1889, several accidents have occurred throughout mainland Mexico.[52] In 1908, a fire at the Dos Bocas drilling site caused fear and panic among the residents of Tantima, the local village, as the explosion rocked the area. After burning for over a month and killing a small number of people, the Dos Bocas fire created a dangerous area that most residents avoided.[53] Besides the rumors and superstitions that characterized the locals' discussion, the event had significant environmental impacts as well. Hydrogen sulphide gas had turned the previously vibrant area into a silent and dead expanse.[53] The transition of the land from verdant to empty resulted in a negative opinion towards the petroleum industry in Veracruz. Other blowouts that followed the incident at Dos Bocas continued to damage the surrounding area's vegetation, wildlife, and general ecosystem.[53] Often, these small-scale fires and spills are viewed as insignificant to the grander environment, which many believe can heal itself. However, the consequence of many small events, according to theorists, is a lasting impact that may not be curable.[54]
Some researchers claim that the degrading infrastructure of many drilling sites in Mexico made areas unfit for habitation. The habitats in question include those used by animals, vegetation, and the human population of the area. The contamination of the ecosystem after drilling occurs often causes towns to lose residents or disappear entirely. Poza Rica, a typical oil town in Mexico, was the subject of a study that revealed the difficulties associated with living in an area dominated by petroleum drilling.[55] The inhabitants of Poza Rica are constantly renegotiating their everyday lives to fit the changing landscape around them; this includes practicing large and small safety measures, ignoring toxic smells in the air, and recovering from the loss of jobs when oil fields are retired.[55] Any area with drilling present became a town in which it was believed deadly accidents could occur. However, people often compromised to remain in their homes, ignoring or simply accepting the potentially dangerous side effects.[55]
One way to analyze the presence of oil companies in places such as Veracruz is to see how the natives responded to outside forces that changed their way of life. The Huastecs, a native population in the area, fought to hold their traditional practice of agriculture when oil companies entered their homeland. The native population's land was often taken without respect for the centuries of native presence there, turning pastures and forests into oil camps. The natives viewed this change as an unhygienic and cruel transformation from forest to industry.[53]
See also
- 2017 Mexican protests
- Chart of exports and production of oil by nation
- Economy of Mexico
- Energy in Mexico
- Electricity sector in Mexico
- List of oil-producing states
Further reading
- Brown, Jonathan C. Oil and Revolution in Mexico. Berkeley and Los Angeles: University of California Press 1993.
- Brown, Jonathan C. "Petroleum, Pre-1938," in Encyclopedia of Mexico, vol. 2. pp. 1076-1082. Chicago: Fitzroy and Dearborn 1997.
- Brown, Jonathan C. and Alan Knight, editors. The Mexican Petroleum Industry in the Twentieth Century. Austin: University of Texas Press 1992.
- Cabrera, Luis (1992). Obra pública de Luis Cabrera (in Spanish). Vol. 4. Mexico: Universidad Nacional Autónoma de México. ISBN 968-36-2451-0.
- García Reyes, Miguel; Ronquillo Jarillo, Gerardo (2005). Estados Unidos, petróleo y geopolítica: las estrategias petroleras como un instrumento de reconfiguración política (in Spanish). México: Plaza y Valdés. ISBN 970-722-351-0.
- Grayson, George W. (1980). The Politics of Mexican Oil. Pittsburgh: University of Pittsburgh Press. ISBN 978-0822934257.
- Hall, Linda B. Oil, Banks, and Politics: The United States and Postrevolutionary Mexico, 1917-1924. Austin: University of Texas Press 1995.
- Meyer, Lorenzo (2000). "La institucionalización del nuevo régimen". In Cosío Villegas, Daniel (ed.). Historia general de México (in Spanish). México: El Colegio de México. pp. 823–880. ISBN 968-12-0969-9.
- Meyer, Lorenzo, Mexico and The United States in the Oil Controversy, 1917-1942. Austin: University of Texas Press 1977.
- Mirbabayev, Miryusif F. (2008) Concise history of Azerbaijani Oil. Baku, SOCAR Publishing House.
- Mirbabayev, Miryusif F. (2017) Brief history of the first drilled oil well; and people involved - "Oil-Industry History" (USA), v.18, #1, pages 25–34.
- Pérez Rosales, Laura (2009). "Entre la diplomacia y el humanitarismo. El diplomático A. Methöfer y su mirada holandesa al México cardenista". Memorias e historias compartidas: intercambios culturales, relaciones comerciales y diplomáticas entre México y los Países Bajos, siglos XVI-XX (in Spanish). México: Departamento de Historia de la Universidad Iberoamericana. pp. 267–286. ISBN 978-607-417-017-7.
- Philip, George D.E., Oil and Politics in Latin America: Nationalist Movements and State Oil Companies. Cambridge and New York: Cambridge University Press 1982.
- Randall, Laura. The Political Economy of Latin American Oil. New York: Praeger 1989.
- Randall, Laura. "Petroleum, 1938-1996," in Encyclopedia of Mexico, vol. 2, pp. 1082-1085. Chicago: Fitzroy and Dearborn 1997.
- Rippy, Merrill. Oil and the Mexican Revolution. Leiden: Brill 1972.
- Silva Herzog, Jesús (1993). Una vida en la vida de México (in Spanish). México: Siglo XXI Editores. ISBN 968-23-1884-X.
- Vuurde, Rob van (2009). "Surgimiento y ocaso de la compañía Royal Dutch Shell en México, 1912-1947". Memorias e historias compartidas: intercambios culturales, relaciones comerciales y diplomáticas entre México y los Países Bajos, siglos XVI-XX (in Spanish). México: Departamento de Historia de la Universidad Iberoamericana. pp. 239–266. ISBN 978-607-417-017-7.
- Wirth, John D., ed. Latin American Oil Companies and the Politics of Energy. Lincoln: University of Nebraska Press 1985.
References
- ^ "Energy: Mexico". World Factbook. CIA. June 20, 2014. Retrieved 2014-11-20.
- ^ Mexico Energy Data, Statistics and Analysis - Oil, Gas, Electricity, Coal Archived 2006-03-09 at the Wayback Machine
- ^ David Alire Garcia, “Mexico to keep pumping Pemex for tax money despite promised reforms” Archived 2015-10-17 at the Wayback Machine, Reuters, 30 Oct. 2013.
- ^ Jonathan C. Brown, "Petroleum: Pre-1938" in Encyclopedia of Mexico, vol. 2. p. 1076. Chicago: Fitzroy and Dearborn 1997.
- ^ a b c d e Brown, "Petroleum: Pre-1938" p. 1076.
- ^ a b Santiago, Myrna I. The Ecology of Oil : Environment, Labor, and the Mexican Revolution, 1900-1938. Cambridge: Cambridge University Press, 2006. Print. Studies in environment and history; Studies in environment and history. pg 51
- ^ Santiago, Myrna I. The Ecology of Oil : Environment, Labor, and the Mexican Revolution, 1900-1938. Cambridge: Cambridge University Press, 2006. Print. Studies in environment and history; Studies in environment and history. pg 82
- ^ Santiago, Myrna I. The Ecology of Oil : Environment, Labor, and the Mexican Revolution, 1900-1938. Cambridge: Cambridge University Press, 2006. Print. Studies in environment and history; Studies in environment and history. pg 83
- ^ Santiago, Myrna I. The Ecology of Oil : Environment, Labor, and the Mexican Revolution, 1900-1938. Cambridge: Cambridge University Press, 2006. Print. Studies in environment and history; Studies in environment and history. p. 65
- ^ Arthur Schmidt, "Weetman Dickinson Pearson, (Lord Cowdray)," in Encyclopedia of Mexico, vol. 2, p. 1068. Chicago: Fitzroy and Dearborn 1997.
- ^ Santiago, Myrna I. The Ecology of Oil : Environment, Labor, and the Mexican Revolution, 1900-1938. Cambridge: Cambridge University Press, 2006. Print. Studies in environment and history; Studies in environment and history. pg 86. Table 2.1
- ^ Schmidt, "Weetman Dickinson Pearson," p. 1068.
- ^ Hall, Linda B. Oil, Banks, and Politics : The United States and Postrevolutionary Mexico, 1917-1924. Austin: University of Texas Press, 1995. Print. pg. 13
- ^ Historical Statistics of the United States, US Bureau of the Census, 1960, p.360. By 1933, the US was a net exporter of petroleum.
- ^ Howard F. Cline, The United States and Mexico. Cambridge: Harvard University Press 1961, p. 211.
- ^ Banco de México, Annual Report for 1947, in Committee on Interstate and Foreign Commerce, "Fuel Investigation: Mexican Petroleum," 80th Congress, 2nd session, HR 2470, Washington D.C., Government Printing Office 1949, p. 8.
- ^ Mexico Oil
- ^ Hall, Linda B. Oil, Banks, and Politics : The United States and Postrevolutionary Mexico, 1917-1924. Austin: University of Texas Press, 1995. Print. pg 32
- ^ Hall, Linda B. Oil, Banks, and Politics : The United States and Postrevolutionary Mexico, 1917-1924. Austin: University of Texas Press, 1995. Print. pg 35
- ^ Mexico. The True Facts About the Expropriation of the Oil Companies' Properties in Mexico: Government of Mexico. Mexico City: Talleres Gráficos de la Nación, 1940. Print.
- ^ Cabrera, 2002; 1416
- ^ Silva Herzog, 1993; 179
- ^ Vuurde, 2009; 258
- ^ Meyer, 2000; 876
- ^ a b Meyer, 2000; 877
- ^ Silva Herzog, 1993; 175
- ^ Silva Herzog, 1993; 176
- ^ Silva Herzog, 1993; 177
- ^ Garcia Reyes, 2005; 355
- ^ Pérez Rosales, 2009; 282
- ^ Krauze, Mexico: Biography of Power, p. 475.
- ^ Meyer, 2000; 879
- ^ "Mexico Oil".
- ^ EIA – International Energy Outlook 2007 – Petroleum and Other Liquid Fuels Section
- ^ Uncovering the Secret History of Wall Street’s Largest Oil Trade Bloomberg, April 2017
- ^ "Mexico - Oil". Country Analysis Briefs. U.S. Energy Information Administration. December 2007. Archived from the original on 2008-06-14. Retrieved 2008-08-01.
- ^ "Two New Gas Companies Break Pemex Monopoly in Mexico".
- ^ Mexico Oil - proved reserves
- ^ "Pemex". Archived from the original on 2007-06-29.
- ^ "Mexico's northern region launches massive development". World Oil. 2001.
- LCCN 80-69780, p. 339
- ^ Acevedo, 1980; 340-360
- ^ Acevedo, 1980; 362-379
- ^ Acevedo, 1980; 360-362
- ^ "U.S. Energy Information Administration (EIA)". Archived from the original on 2007-04-13. Retrieved 2007-05-24.
- ^ Mexico Oil - production - Country comparation
- ^ Santiago, Myrna (2013). "Extracting Histories: Mining, Workers, and Environment". RCC Perspectives. 7: 81–88 – via JSTOR.
- ^ Brown. Petroleum: Pre-1938. p. 1076.
- JSTOR 3115461.
- ^ "Deepwater Horizon Marine Casualty Investigation Report" (PDF). Office of the Maritime Administrator. 17 August 2011. Retrieved 31 October 2018.
- ^ "Oil and the Environment". U.S. Energy Information Administration. 31 August 2018. Retrieved 6 November 2018.
- JSTOR 3115461.
- ^ JSTOR 3985378.
- ^ Rader, Douglas N. (August 2010). "A Generation-Scale Disaster in the Gulf". USA Today Magazine.
- ^ S2CID 155691921.
External links
- Mexico's crude oil production chart (1980-2004) - Data sourced from the US Department of Energy
- Energy Secretariat (SENER)
- Energy Regulatory Commission (CRE) Archived 2007-11-28 at the Wayback Machine
- Energy Savings National Commission (CONAE)