Mexico’s state-owned petroleum company Pemex says it is in talks with Chinese companies to create a US$4 billion investment fund to finance energy projects.
China has already invested billions dollars in Latin America’s energy sector, but the proposed fund would be the largest Chinese investment fund in Latin America, Pemex said in a statement.
The deal has not been signed yet but Pemex revealed that it is in the final stages of negotiation. It did not, however, disclose how many Chinese companies would participate into the fund. Reports indicate that Pemex is in talks with Chinese firms such as Xinxing Ductile Iron Pipes and SPF Capital Hong Kong Ltd.
Oil is a key component of Mexico’s GDP and provides around a third of the federal government’s annual budget. Mexico recently reformed its energy sector in a bid to attract foreign investment, create more jobs and reverse the decline in oil production.
Last year, according to the U.S. Energy Information Administration, Mexico produced 2.90 million barrels per day, continuing the decline from its peak of 3.85 million in 2004. Crude oil is the most significant component of Mexico’s liquid fuels production, accounting for at least 85% of production in the past two decades.
The United States is Mexico’s biggest oil customer, but U.S. oil imports from Mexico have fallen 47% in the past decade, according to Bloomberg. Therefore, Mexico is now planning to export oil to Asian countries such as India and Japan.
Mexico’s recent energy reforms could also lead to an end to Pemex’s monopoly, allowing other energy firms to participate int he sector. There are also reports that telecom business tycoon Carlos Slim wants to invest in the country’s energy sector.