In 2008, Mexico was the seventh-largest oil producer in the world, and the third-largest in the Western Hemisphere. State-owned Petroleos Mexicanos (Pemex) holds a monopoly on oil production in the country and is one of the largest oil companies in the world. However, oil production in the country has begun to decrease, as production at the giant Cantarell field declines.
The oil sector is a crucial component of Mexico's economy: while its relative importance to the general Mexican economy has declined, the oil sector still generates over 15 percent of the country's export earnings. More importantly, the government relies upon earnings from the oil industry (including taxes and direct payments from Pemex) for about 40 percent of total government revenues. Therefore, any decline in production at Pemex has a direct effect upon the country's overall fiscal balance.
Mexico's total energy consumption in 2006 consisted mostly of oil (55 percent), followed by natural gas (32 percent). All other fuel types contribute smaller amounts to Mexico's overall energy mix. Natural gas is increasingly replacing oil as a feedstock in power generation. However, Mexico is a net importer of natural gas, so higher levels of natural gas consumption will likely depend upon higher imports from either the United States or via liquefied natural gas (LNG).
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