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Mexico oil production falls again


Mexico’s oil production fell for a second consecutive month in October.

Production totaled 1.627Mb/d, down from 1.644Mb/d in September, with NOC Pemex’s exploration and production arm PEP accounting for 97% and private players the rest, according to hydrocarbons commission CNH.

Output has failed to recover after declining by some 100,000b/d in May-July, which Pemex attributes to a deal to cut production struck with OPEC+ nations.

According to Pemex projections earlier this year, the company plans to lift the country’s output to 1.84Mb/d by year-end and to 1.94Mb/d in 2021. Production should have begun to pick up as soon as the company was free from the OPEC agreement, but has continued to fall.

Mexico’s oil output has been in steady decline since reaching a peak of almost 3.4Mb/d in 2004. The bulk of production still comes from its latest major discoveries of the 1990s: the Ku, Maloob and Zaap fields, which yielded Pemex 636,000b/d in October, over 40% of the country’s total production.

Pemex’s ambitious targets hinge on significantly increasing output at its 20 priority fields, most of them shallow water discoveries off the coast of Tabasco state. And while the company managed to churn out 127,700b/d from these fields in September, compared to almost nothing a year earlier, it has lagged behind on its investment and spudding commitments at those fields, according to CNH.

An overview carried out by the regulator of 17 of the 20 fields revealed that, up until this August, Pemex had carried out 34% of its committed investments in those fields and 29% of spudding activity for the full year.

While the 17 fields managed to yield 92,000b/d of additional production during September, in order to comply with its target Pemex would have needed to produce 222,000b/d in the month.

The company’s 2020 plans have been curtailed by the COVID-19 pandemic – Pemex is the oil major with the most confirmed cases in the world – and have also been affected by its tight finances and the government’s emphasis on lifting its refining capacity through a series of ambitious projects. These include the US$8.9bn Dos Bocas refinery in Tabasco.

According to Carlos Serrano, chief economist at BBVA México, the emphasis on refining has contributed to the company’s losses. Future prospects are also not encouraging, since refining is expected to decline globally in the coming decades. Furthermore, Mexico’s output has trouble competing with cheaper fuel imports from the US, Serrano said.

In a statement cited by local press, Serrano also emphasized that Mexico has considerable deepwater potential that could be exploited by private players.

“There are several deepwater reserves Pemex does not have enough resources or knowledge to exploit,” Serrano said, adding even if the NOC managed to increase production, the country’s oil revenues would still fall due to the exchange rate and low crude prices.


2 Comments on "Mexico oil production falls again"

  1. Cloggie on Sun, 29th Nov 2020 5:17 am 

    Mexican oil is yesterday’s news. The battle for offshore wind in the North Sea has begun in earnest with multi-GW projects underway:

    “190 GE Haliade-X 13 MW Turbines for Doggerbank”

    The shallow waters around Europe are sufficient to deliver 3-5 times more electricity than the EU currently consumes. Gonna be big business.

  2. Speedy Gonzalez on Mon, 30th Nov 2020 9:17 am 

    Good thing we still have beans then. Otherwise we’d be really pissed!

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