Oil Industry in Mexico - History

History

Exploratory wells were first drilled in Mexico in 1869, but oil was not discovered until the turn of the twentieth century. By 1901, commercial production of crude oil in Mexico had begun. By 1910, prospectors had identified the Panuco-Ebano and Faja de Oro fields located near the central Gulf of Mexico coast town of Tuxpán. Systematic explorations by foreign companies (mainly American) came to supersede the uncoordinated efforts of speculative prospectors. Mexico became an oil exporting nation in 1911.

Legally, Article 27 of the constitution of 1917 granted the Mexican government the permanent and complete rights to all subsoil resources. This would cause conflicts between the Mexican government and foreign companies - especially American oil companies - until the matter was resolved in the 1930s. In 1925, President Plutarco Elías Calles decreed that foreign oil companies must register their titles and limited their concessions to fifty years.

During the 1930s, Mexico was second behind the United States in petroleum output and led the world in oil exports. However, as a consequence of worldwide economic depression, the lack of new oil discoveries, increased taxation, political instability, and Venezuela's emergence as a more attractive source of petroleum, output during the early 1930s had fallen to just 20% of its 1921 level. Production began to recover with the 1932 discovery of the Poza Rica field near Veracruz, which would become Mexico's main source of petroleum for the next several decades.