Illustration: Liu Rui/GT

Earlier this month, the Mexican Congress approved an energy reform measure, opening the country's oil sector to domestic and foreign private capital. President Enrique Pena Nieto signed the bill into law, thus ending 76 years of state control over the country's oil resources.

This sounds like exciting news for international oil giants, with multinational enterprises, such as Exxon Mobil and Shell, and some Chinese companies showing an interest in investing in Mexico.

But after a closer look at the international scenario for oil and the geopolitical changes brought by the oil reforms in Mexico, we can see that Mexico is not a golden paradise for Chinese oil companies. It is also full of risks and challenges.

To revive its oil industry, Mexico is in dire need of funds and technologies for deep sea oil and gas exploitation as well as shale oil and gas exploitation. However, Chinese enterprises only have advantages in terms of funds, while lacking technologies for exploiting deep sea and shale gas.

Therefore, in the face of competition from Western oil companies and Brazilian national oil companies, it is impossible for the Chinese firms to grab the leading position in the Mexican market.

Chinese enterprises must raise their own technological strength and carry out cooperation with international oil giants, so that they can have a share in the Mexican market.

Meanwhile, despite the fact the current Mexican government is determined to end the monopoly and push forward reforms, the 76-year-long history of oil nationalization indicates that nationalization has been greatly supported by the Mexican public.

Nieto's predecessor, Felipe Calderon, once proposed similar reform measures, but eventually had to cancel them due to strong opposition from various classes.

The Nieto-led Institutional Revolutionary Party only won a few percentage points more than its rival, the Democratic Revolution Party, in the 2012 presidential election. The latter represents the grass-roots electorate, which advocates resource nationalism and objects to foreign investment in state-owned oil fields.

If the Nieto administration opens up the oil market and fails to improve the well-being of its people, it is likely to lose votes and be replaced by the opposition party.

"There's a lot of unhappiness in Mexico over the slow economic growth and the 2018 presidential election is going to be fierce." Tony Payan, director of the Mexico Center at Rice University's Baker Institute for Public Policy in Houston, was quoted by Bloomberg as saying.

Therefore, huge political risks were hidden behind the current hustling and bustling wave to invest in Mexico. Once the current ruling party is replaced by another and the nationalization of oil makes a comeback, Chinese oil enterprises that lack experience in managing political risks may suffer great losses.

Such cases have taken place in some oil-rich Latin American countries. The Chinese government and companies have carried out a new cooperation framework with Venezuela to offer loans in exchange of oil. However, this will not work in Mexico, as the Mexican government only allows the use of cash rather than oil to pay back loans.

Russia has recently been facing Western sanctions due to the Ukrainian crisis. Islamic extreme forces are shaking up the situation in Iraq. And wars constantly happen in oil-rich countries such as Nigeria and Libya. All these will lead foreign investment to withdraw from these countries, which is an opportunity for an opening-up in Mexico.

The country's oil production capacity may be raised, which will help push down the international oil prices, thus indirectly safeguarding China's oil security. But even if Mexico's oil production increases, there is little likelihood that China can directly get oil supplies from Mexico in a short period.

Mexico's oil production areas are on the Gulf of Mexico and the land associated with it, which are located on one side of the Atlantic Ocean. There have been tight restrictions for oil tankers to go through the Panama Canal, not to mention the high costs for passing and the long queues.

Yet over a long period of time, the to-be-built Nicaragua Canal may break the bottleneck. A Hong Kong company has been empowered to construct the canal, and with its completion, it is expected that it will ease the strains in the Panama Canal.

At that time, if Mexico still pushes forward oil reforms, then Mexico, together with a US undergoing the "shale revolution" and a Canada promoting tar sands, will make North America a resource-independent and pure-oil-export region.

A huge volume of oil can be transmitted to East Asia including China with high speed and low costs. This will boost oil cooperation between China and Mexico and the stability of the global oil market.

The author is a senior research fellow at the Academy of Chinese Energy Strategy, the China University of Petroleum, Beijing. opinion@globaltimes.com.cn