Exxon-Mobil sees Opportunity in Mexico Oil Deregulation

The next frontier for big oil is just across the border in Mexico. The prospect of up to $20 billion a year in foreign investment prompted the Mexican Congress to overturn a 75-year old law banning foreign oil companies from drilling in the country, Bloomberg reported. If it's approved by Mexico's state legislatures the law will give oil and gas companies such as Exxon Mobil

, Chevron Crop

, Apache

BHP Billiton

, and Conoco Phillips

access to the largest unexplored oil fields south of the Arctic Circle. Mexico is the world's ninth largest oil producer, oil production in Mexico is dominated by the government owned oil company Pemex. Pemex's production has been falling in recent years. Major US oil and gas fields such as the Permian Basin and the Eagle Ford shale which have seen massive increases in drilling and production in recent years extend across the border into Mexico, BHP Billiton's head of petroleum Tim Cutt told Reuters. Billiton has been making major investments in North America gas and oil in recent years. Deal will Probably Pass Political observers think that state legislatures will pass the required change to Mexico's charter because most of them are controlled by allies of President Enrique Pena Nieto and his PRI party. Pena has made economic liberalization one of his main goals. Some US oil share rose on the news of the Mexican opening. In midday trading on Dec. 13, ConocoPhillips was up .10% and ExxonMobil's share price rose by .05%, but Chevron was down .69%, BHP fell by.16% and Apache fell by .27% on the same day. That means it will be some time before the Mexican opening affects US energy stocks.