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OECD warns Mexico on oil dependence

May 17, 2013 at 6:31 AM   |   Comments

PARIS, May 17 (UPI) -- Mexico is too dependent on oil and environmental degradation has accounted for a drop in gross domestic production, the OECD said.

Mexican President Enrique Pena Nieto said overhauling the country's energy sector is a top priority for his administration. Reforms under consideration include letting national oil companies partner with their foreign counterparts to open the country to new investments.

U.S. lawmakers this week passed legislation that would open the Gulf of Mexico border with Mexico to energy explorers.

Oil made up about 16 percent of Mexico's export earnings in 2011 and the industry accounted for more than 30 percent of the government's revenue, the U.S. Energy Department's Energy Information Administration reports.

"While fiscal policy continues to be prudent, public debt has increased during the recession, as in other countries, and the government budget is overly dependent on oil," a review from the Organization for Economic Cooperation and Development states. "The risk of decline in oil output, in the absence of energy reform, is a threat to fiscal stability."

The U.S. Energy Department said natural gas imports increased 21 percent last year to 2.1 billion cubic feet per day year-on-year. Though Mexico is one of the 10 largest oil producers in the world, its production has declined steadily since 2004.

The OECD added that environmental degradation in Mexico represented a 5 percent loss of GDP and the country was behind other member states in terms of emissions.

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