PESTEL analysis of Mexicos oil market

ENI is an Italy ‘s largest oil company and 7th largest oil company in the universe. Head quartered in Italy operates in oil, natural gas, electricity coevals and sale, oiled services building, petrochemicals, and technology. ENI policy is to “ ‘more based on doing the most of people, lending to the development and wellbeing of the communities with which it works protecting the environment, puting in the technological invention and energy efficiency, every bit good as extenuating the hazards of clime alteration. ” ENI is good established company in the oil industry with of $ 680 million worth of assets around the Earth, runing in 77 states with 78400 employees. ENI is more towards geographic expedition and production of oil and gases. The mission and vision seems to be of the company as follows.

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“ We are a major integrated energy company, committed to growing in the activities of determination, bring forthing, transporting, transforming and selling oil and gas.

Eni work forces and adult females have a passion for challenges, uninterrupted betterment, excellence and peculiarly value people, the environment and unity. ”


“ Eni is an incorporate energy company, committed to developing its activities in research, production, conveyance, transmutation and selling of oil and natural gas ”

Eni plans to prolong a strong production growing in the close hereafter coercing upon internal development and aiming over 1.8 million barrels on tantamount /day in 2011 ( a annually mean addition of about 6 % ) . Eni ‘s confirmed reserved achieved over 7 billion barrels on equivalent. Even though

Mexican oil market

Mexico is the 7th largest oil manufacturer in the universe bring forthing about 3.8 million barrels per twenty-four hours. State owned company PEMEX holds big no. of oil in Mexico and plays a monopoly function in the Mexican oil market hence any difference in PEMEX will hold direct impact on the state ‘s economic system. Oil industry plays a critical function in the Mexican economic system, and oil industry generates 15 % of state ‘s exporting net incomes. Apart from that the Mexican economic system relies largely on oil net incomes about 40 % of authorities ‘s grosss. The Mexican offshore consists 10.5 billion oil barrels as proved militias. Harmonizing to oil study on Mexico it states “ Mexico ‘s entire energy ingestion in 2006 consisted largely of oil ( 55 per centum ) , followed by natural gas ( 32 per centum ) . All other fuel types contribute smaller sums to Mexico ‘s overall energy mix. Natural gas is progressively replacing oil as a feedstock in power coevals. However, Mexico is a net importer of natural gas, so higher degrees of natural gas ingestion will probably depend upon higher imports from either the United States or via liquified natural gas ( LNG ) . ”

The job was Mexico has been a clause in the fundamental law saying that PEMEX has sole rights to the geographic expedition and production of natural gas. In 1995 the Mexico passed the Natural gas jurisprudence, leting private investors to be involved in the storage and distribution of natural gas, while still reserving ownership with PEMEX. In 2004, Mexico invited foreign companies in the state to spread out its natural gas production. PEMEX offered these companies seven block in the Burgos basin in the nor’-east. Overall Mexico has taken a prima function in natural gas development among oil bring forthing states through its determination to ask for private oil companies alternatively trusting on PEMEX.

The Mexican authorities is hopeful that with a Expanding oil and gas industry and the decrease of corruptness, Mexico ‘s economic state of affairs will better.

Most of the geographic expedition and production is produced in Gulf of Campeche ; the country includes two chief production Centres known as Cantarell and Ku-Maloop-Zaap ( KMZ ) . Harmonizing to the Energy information disposal it province that “ The Cantarell oil field is one of the largest oil Fieldss in the universe, but production at that place has declined dramatically in the past several old ages. In 2008, Cantarell produced 1.0 million barrels per twenty-four hours of petroleum oil, down over 30 per centum from the 2007 degree of 1.47 million barrels per twenty-four hours and down about 50 per centum from the peak production degree of 2.12 million barrels per twenty-four hours in 2004. As production at the field has declined, so has its comparative importance to Mexico ‘s oil sector: Cantarell contributed 36 per centum of Mexico ‘s entire petroleum oil production in 2008, versus 62 per centum in 2004. ”

Plague Mexico


The Mexican oil industry started to din in 1970 ‘s and till now the Mexican oil industry has a rich history in oil production.

Harmonizing to the statistics of oil of Mexico the state has 10.5 billion of proved oil in its offshore.

The oil sector is a important constituent of Mexico ‘s economic system, the state, the oil sector still generates over 15 per centum of the state ‘s export net incomes.

The state largely relies on U.S because the 30 % of Mexican oil comprises 10 % of U.S oil and natural gas.

The offshore of Mexico oil and gas industry about generates $ 70billion and offers more than 400,000 occupations.

The industry besides provided about $ 20 billion in grosss to federal, province, and local authoritiess through royalties, fillips, and revenue enhancement aggregations.

The Mexican authorities establishes the general accounting rules in Mexico. This has introduced to the license holders and includes an accounting rule in Mexico. This directive is intended to standardise the information that PEMEX and permit holders submit energy regulative committee, in order to ease its ordinance and comparing.

After the economic crisis in 1994 the state initiated a plan called PIDIREGAS for the intent of pulling private sector capital and long term funding to develop strategic and extremely profitable undertakings and more flexible governmental budgetary instruments to transport out strategic undertakings.

NAFTA understanding contributed a batch of advantage to the Mexican economic system.

Tax grosss as a per centum of GDP stand at 12 % far behind the OECD norm. A financial reform measure was approved in 2007 to increase the revenue enhancement grosss by 2 % of GDP over the current six twelvemonth disposal.

Petroleum gross still accounted for about 40 % for the whole Mexican economic system.


At present, with easy deteriorating crude oil production capacity in western states, the possibility of significantly deteriorating production capacity in the Soviet Union and crude oil demands increases due to economic growing.

Harmonizing to the statistics the PEMEX is the largest subscriber to the economic system. In 2002 it provided 38 per centum to the financial grosss, 1.2 per centum of the GDP and employed 141,628 employees.

The statistics shows that the state has 10.5 billion oil proven militias which will lasts for 25 old ages and entire energy militias i.e. hydrocarbon, natural gases which will consequences in 18 old ages of entire militias.

The Mexican economic system is free market economic system. The state has modern engineerings every bit good as outdated industries and agribusiness, the economic system is chiefly dominated by private sector.

The authorities has invested in supplying conveyance installations and expanded services of railway, havens telecommunications, electricity coevals, natural gas distribution, and airdromes.

“ Mexico has free trade understandings with over 50 states including, Guatemala, Honduras, El Salvador, the European Free Trade Area, and Japan, seting more than 90 % of trade under free trade understandings. “ ( )

Although there were several issues in the state ‘s GDP due to recession, now it has been executing good compared to the yesteryear, apart from that the current authorities is seeking to supply better installations by upgrading substructure installations, overhauling labour Torahs, and fostering private investing in the energy sector.


The authorities spend immense sum of money to safeguard the environment, and it ‘s an economic and societal development of oil and energy bring forthing parts.

PEMEX spend important resources to supply cleaner fuels and besides to saving and route development for the benefit of rural communities, and to the saving of ecological militias.

The Mexican authorities has imposed rigorous regulations and ordinance to protect its environment since its covering with the nature, late BP oil spill, was the high spot because the company has spend 1000000s to the authorities as compensations of botching the environment and impacting the wild life.


Today ‘s globalized universe engineering has become an indispensable component for houses that hope to vie and thrive. Gulf of Mexico is a technological advanced state.

Since Mexico is covering with rough oil production the state has to hold the cognition to go on to turn, state has been ranked at 71st for technological efficient state.

Harmonizing to the statistics the Mexico ‘s public presentation in single variables demonstrates how far the state has to travel catch up with the universe ‘s networked economic systems ; besides it continues that, the state has ranked 92nd in engineering handiness and the ability of its houses to absorb engineering.

Mexico is an OECD state which has invested in ICT. Fixed and nomadic telephone and cyberspace hosting have grown dramatically in the last five old ages by 21 % and 67 % severally.

Though cyberspace remains reasonably low of 16.5 % harmonizing to the international telecommunication brotherhood,

Mexico besides been ranked 60th for the variable of FDI engineering transportation.

Poor instruction criterions the deficiency of centralised invention policy, under developed ICT substructure all stand as obstructions.

Competitive Analysis

ENI chiefly concentrate in geographic expedition and production of rough oil. It ‘s one the largest oil company in the universe ranked 7th and map is 77 states, Employs about 78,400 people across the universe, The ENI reported gross from its nucleus concern for 2009 seems to be 83.23 billion Euros, investing and acquisition amounted to 16.02 billion Euros. ENI is the taking provider of gas in footings in the European market. Its strong market placement is underpinned by extended gas supplies. ENI refine and selling is the market leader in Italy ‘s oil refinement company and competitively positioned in the European market. ENI operates in 15 states of the African continent with a 53 % of entire hydrocarbon production. Since its operation in 77 states it has a competitory advantage over its planetary presence and a strong trade name image. Initially AGIP was the province owned Oil Company until ENI was formed in 1953, after formation of ENI, AGIP was enacted to the company which was a strong determination for the company and ENI became the oil gas imperium in Italy, AGIP was the chief sector for geographic expedition and production of oil. They besides seeking to cut down air pollution of Installation of high engineering in several of its production installations, and continuously treating to cut down CO2 emanations, in reduced to 8 % in 2008. The production public presentation of the ENI installations or reservoirs has an impact of the company public presentation and this is unpredictable improper to the regulations and ordinance amendments in the host state. The company ‘s refinement and selling section is well affected by the alterations in European refinement borders. The company have the capacity to spread out its concern internationally, due to its fiscal public presentation and investing ability and because of its operating experience since it has been working in 77 states. There is a good chance for the ENI technology sector in the country of hydrocarbon intervention. The fastest turning country was Middle East in this sector. Now there are chances to run into the demand in Latin America, Africa, Russia, and Caucasus states. Offshore concern seems to be the cardinal section for ENI with a highest growing rate. ENI tends to develop in this peculiar country ; ENI be probably to concentrate more on West African off shores of long term commercial policies. ENI should concentrate on its activities in country where it has been present for a long clip and hunt of chances in the emerging markets such as China and India. Besides the company tends to originate from the hydrocarbon section therefore the company is concentrating more towards supplying quality and high tech installations for its clients.

Selling Scheme

Market Size

Mexico is sufficiently a immense market in cardinal bettering productiveness. It allows houses to profit from economic systems of graduated table in bend promoting them to put in research and development, innovate, and invariably better their production in procedure. In footings of domestic market, the Mexico population has about 100 million and buying power is turning. Recently reached macroeconomic stableness, stronger, growings, spread outing recognition and societal plans for the hapless have contributed to a market decrease in per centum of Mexicans under poorness line. The size of Mexico ‘s foreign market is boosted by its extended web of free trade understandings,

NAFTA has provided Mexico with free entree to its chief market, the U.S, from NAFTA ‘s origin to 2005, regional trade in north America grew by 128 % , besides it as a accelerator for pulling FDI to Mexico and helped it diversity its exports.

Marketing Mix

The company reorganized its activities to provide the market efficaciously by opening six subdivisions around Italy. ENI adhere to its client demands and its well cognizant client demands, the selling scheme of ENI is aimed at client satisfaction, all the manner through the scene of a new commercial offer customized demands. ENI provides broad scope of proficient service to its industrial clients, the chief service includes

Surveies on co-generation and proficient testing of the solutions suggested in instance of building or ascent of a co-generation works.

Combustion analysis and energy control of bing workss for measuring their proper usage and efficiency.

Trials of conformity with safety ordinances, environmental impact.

( Source, ENI )

Since ENI has a strong trade name value and its planetary presence will be an advantage to be competitory in the Mexican market

Topographic point

Mexico is a well a big market with 100 million of population, ENI chiefly focuses on Exploration and production, hence ENI should concentrate on obtaining permission to get down its operation in the offshore. The Mexican statistics shows that there is 10.5 billion barrels of proved oil militias in the offshore therefore this the right clip for a company like ENI to put and increase its markets portion.

Monetary value

Monetary values are chiefly determined by the OECD, despite the planetary economic scenario the monetary values of the trade goods have increased well, farther more the monetary values may increase in natural stuffs and oil, with hazard of negociating the economic growing.


ENI concluding merchandise will be rough oil


Market positioning

Target market

ENI Schemes

ENI ever set its strategic programs for future public presentation harmonizing to the ENI their 2009-2012 was as follows.

Production growing: 3.5 % CAGR to 2012- its scheme delivering in geographic expedition and production with an mean one-year rate

Militias replacing ratio: 130 % in the 2009-2012 period- modesty replacing is calculated by spliting the modesty oil capacity with the extracted oil militias, if it 100 % its sustainable, more than 100 % means the company can turn

Strengthen European gas market leading

G & A ; P cumulative 2009-12 EBITDA proforma adjusted: a‚¬20 billion- strategic program to increase gas and power net incomes up to 20 billion Euros

Enhance R & A ; M profitableness: 2012 +a‚¬400 million EBIT vs. 2008- addition the overall net income of refine and selling by 400 million Euros.

Efficiency plan successfully realized in 2006-2008 to duplicate to a‚¬2 billion by 2012- efficiency plan is developed to be cut the company unneeded measures.

( Beginning: )


The Mexican state has opened its market through free trades, it has made impressive gait for the state ‘s economic system, liberalising and bettering the efficiency of its economic system. Though there some failings remain such as hapless instruction, hapless public administration, rampant corruptness, low degree of citizen trust politicians, and hard revenue enhancement system with little revenue enhancement base, at the same clip the Mexico has great possible for its geographical location and immature population and quickly spread outing market, this possible must and can be utilized by articulation attempt of authorities and civil society, which will take to great diverse competitory advantage for its citizen.

Based on the analysis done in conformity with the company, its seeable that ENI has the potency in puting for farther oil production in Mexico, because the state has immense proved reserve oil in its offshore, and besides certain failing tend to stay on company public presentation in certain countries such as net income border lessening due to instability of oil production, apart from that there is great possible for a company such as ENI for get downing its geographic expedition in Gulf of Mexico.

Harmonizing to the MMS study it states that “ Eni is good suited for the deepwater Gulf of Mexico because it is a “ demand side company ” ( in a rhythm of aggressive acquisition ) . Therefore to the analyze carried out in sing the state Mexico and ENI the study suggests that ENI should put and increase its market portion.


Eni is likely more interested in geographic expedition than other bidders on the same assets, and hence less risk-averse. It is an of import measure in Eni ‘s scheme of international enlargement of gas activities

I suggest that ENI has to put in gulf because harmonizing to statistics the state holds 10.5 billion barrels of proved oil militias

The company should see puting in alternate energy beginnings e.g. solar energy because the planetary oil industries are stepping into alternate energy beginnings.


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