When Mexico began the exciting process of deregulating its oil and gas industry in 2015 (after nearly 80 years of state control); it was inevitable that foreign investment would start flowing into Mexico. Opportunities for multinationals have improved significantly as the government has lifted controls within the electricity sector and made a concerted effort to reduce corruption.
From a recruitment perspective, the influx of new investment has resulted in a serious talent shortage on the commodities front, however, this will lead to good things in the medium-long term. While many of the foreign investors coming in are currently forced to fill C-suite roles from outside of Mexico, most are committed to quickly developing a pipeline of home-grown professionals. Within the next four to five years, we expect to see the local talent pool to grow exponentially.
Mexico has a lot to offer – free trade agreements with more than 40 countries and a huge domestic demand leave analysts predicting that oil production could essentially double to five million barrels a day by 2030. Midstream companies are now specifically targeting the Mexico market, and national oil and gas company Pemex (which has enjoyed a monopoly for decades), is now facing new competition. BP alone is planning 1,500 branded gas stations in Mexico over the next five years.
Many companies headquartered in Houston are also currently committing significant investment into Mexico, which is viewed as having the best energy future of any Latin American nation, with Brazil the only other country coming close. American investors seem undeterred by President Trump’s political rhetoric against its southern neighbour, believing both that the President is unlikely to make good on his threats to significantly impact free trade.
Corruption has long influenced the Mexican commodities industry resulting in a lack of security, infrastructure weaknesses, water shortages for shale, and pipeline bunkering. That will not dissipate overnight, however, there is certainly a belief that the authorities are working hard to implement more stringent laws to penalize offenders. All of which encourages investment and creates more employment opportunities (in turn a higher level of expertise will be required within the commodities space).
Due to the shortage of local talent in Mexico, senior hires within the commodities sector are coming from more established markets such as Singapore, Houston, Brazil and the UK. In order to entice commodity professionals to relocate, expat packages on offer are attractive.
As the deregulated market matures, locals being hired to work for expats today will increase their knowledge base exponentially, which will ultimately result in local talent taking on leadership roles in the near future.
Liberalisation in Mexico is positive news for international investors as well as the nation’s own up-and-coming commodities professionals. Mexico’s economy looks set to grow at 3-6% annual clip in the coming decades, if predictions are correct, with real GDP set to soar over the next ten years.
by Brad Knoxview my profile