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Pemex stabilizing crude oil production, expects to increase drilling by 200%: CEO

 

 


 

By Daniel Rodriguez / Platts

MEXICO CITY
Petroleumworld 03 20 2019

Pemex has stabilized its crude oil production at 1.68 million b/d in March and expects to raise it by the end of the year as the state-owned Mexican oil company boosts drilling activity by 200% year on year in 2019, according to CEO Octavio Romero Oropeza.

"According to the company's technical team, we have stopped our [oil production] decrease ... and we can expect an increase [in output] starting this year," Romero said Monday at the commemoration of Mexico's nationalization of its oil industry.

Pemex will drill 506 wells in 2019, compared with 80 wells in 2018, which would be its highest level since 2014, he added.

The company expects to post average oil production of 1.72 million b/d in 2019, Romero said. The company is currently developing 20 onshore and shallow water fields to boost production.

Pemex's production has been on a continual decline since it peaked at 3.4 million b/d in 2003 as major offshore fields like Cantarell enter their last few years.

80% OF WORK ON NEW FIELDS AWARDED

These areas will reach a combined peak production of 320,000 b/d by 2022, according to a presentation by Romero. Four of these fields are onshore, and the other 16 are in shallow waters.

To develop the shallow water projects, Pemex ordered the construction of 13 production platforms and 175 km of offshore pipeline. It will also tie these areas to eight existing production facilities. Pemex is going to drill 72 offshore and 44 onshore wells to develop the 20 areas. About 80% of the work has been awarded so far using integral service contracts, Romero said.

By using this development scheme, Pemex saved over Peso 15.6 billion ($820 million) in expenditure compared with 2018 reference prices, he added.

PEMEX HAS NOTHING TO SHOW IN DEEPWATER

Part of the decrease of Pemex's reserves and oil production can be attributed to its efforts in deepwater exploration, Romero said. From 2012 to 2018, Pemex spent over Peso 160 billion ($8 billion) on exploration activities. Half of this was spent on deepwater regions.

The company participated in major deepwater discoveries such as the Trion and Maximino-Nobilis projects. Pemex awarded a farmout to BHP for the development of Trion, which is expected to begin production in 2023 with a peak production of 100,000 b/d.

The company tried unsuccessfully to farmout its Maximino-Nobilis project in 2017. This area has an expected peak production of 175,000 barrels of oil equivalent a day, according to Mexico's National Hydrocarbon Commission (CNH).

"We did important investments in deepwater exploration without a single drop oil produced to date," Romero said. The company will stop exploring deepwater projects to focus all its resources in shallow water and conventional onshore areas, he added.

"Everything we find, every discovery will be added into our production," Romero said. Pemex expects to obtain over 1 million b/d of oil from new discoveries by 2024, reaching a total output of 2.65 million b/d by the end of December of that year, he added.

A CHALLENGE TO PRIVATE COMPANIES

On Monday, Lopez Obrador urged private companies holding exploration and production contracts to expedite their investments and increase production, adding that he will honor upstream contracts signed by the previous administration.

During Lopez Obrador's term, Mexico will find which model is better: awarding more areas to private companies or assigning them directly to Pemex for their development.

"We are going to compete against these private contracts, and we are going to show that Pemex can be more efficient than private companies." Lopez Obrador said, adding: "That is our challenge."

Lopez Obrador previously said he would not restart new upstream auction rounds until private companies increased their investment and oil production, proving Mexico's new upstream framework was successful.

 


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Story by Daniel Rodriguez from Platts / SPGlobal.

- newsdesk@spglobal.com

spglobal.com
03 19
2019

 

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