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Source: El Daily Post
Yearly figures for different economic activities, including oil and gas sector trade, have been published in the last few days. Net income from Pemex trade dropped to an all-time low, and its export revenue was surpassed by both agribusiness exports and remittances. Is it time to come to terms with the fact that oil and gas is not Mexico’s forte?
Down and out. According to the Energy Secretariat’s Energy Information System, Mexico’s oil and gas sector exports for 2015 totaled $21.19 billion, while its imports were worth $20.85 billion. The net result is a paltry $336.4 million in foreign income. Compared to net income from previous years, this is by far the worst result since oil and gas trade statistics are available. Providing some perspective, and worse news, the National Statistics Institute reported total oil sector export revenues as reaching $23.43 billion, but imports $33.29 billion, for a net deficit worth $9.86 billion.
Not to rub salt on the wound, but, at its peak in 2006, the oil and gas trade netted Mexico $27.38 billion; during the Great Recession of 2009, net income dropped to $16.40 billion, but then recovered to $25.05 billion in 2011. Ever since, Mexico’s oil and gas sector income dropped steadily every year, reaching $13.12 billion in 2014. Steadily, until last year’s abrupt decline.
Mexico has registered its first-ever deficit in the hydrocarbons trade in 2015. Next year could be worse.
Naturally, these figures were deeply affected by the drop in international oil prices, but the trend affected prices for both exports and imports. Energy Secretariat figures show income from crude oil sales, the country’s main hydrocarbons industry export, amounted to $18.52 billion in 2015, a 48.33% decrease from the previous year’s $35.86 billion. Needless to say, the lower income is also related to decreasing oil and gas production. On the other hand, fuel imports in 2015 amounted to $18.98 billion. This is both a 37.2% decrease from the $25.46 billion paid for imported fuels in 2014 and 2.5% higher than crude export income in 2015.
Agribusiness and remittances. During his recent visit to the Arabian Peninsula, President Enrique Peña Nieto spent some time hawking Mexican agricultural and agri-industrial exports. Apparently, he was onto something. According to the National Statistics Institute, these exports totaled $24.46 billion in the first eleven months of 2015, 5% higher than in the same period a year before, and have grown at almost 9% yearly during the last decade. Chief among these are avocadoes (the “green gold”), tomatoes and beef, sales of which rose 21% year-on-year.
Similarly, as the central bank reported, 2015 remittances from Mexican workers abroad, principally in the United States, rose 4.75% over the previous year and, at $24.77 billion, surpassed oil export revenues for the first time in the country’s history. This increase is very likely related to the improvement of the U.S. economy leading to more jobs and better salaries in the construction, agriculture and service sectors where most Mexicans migrants are employed. Barring a new recession, this source of foreign income will likely continue its upward march in 2016.
The bottom line. 2015 was a bad, bad year for the Mexican oil industry, and trade in oil and refined products has ceased to be profitable. Thankfully, Mexican trade depends ever less on it. Even without reference to manufacturing industries, which provide the lion’s share of foreign income, Mexican agribusiness exports are making up the difference. Cheap oil is not where the country’s economic prospects lie. It is high time to face the facts and plan accordingly.
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On the horizon
Pemex should be detailing the number of employees it will retire or lay off this year in the coming week. Stay tuned for developments.
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