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Pemex falls further behind on E&P targets

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Mike Pompeo and Juan Guaido, left, in Bogota.

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By Rebecca Conan / Argus

MEXICO CITY
Petroleumworld 01 21 2020

Mexico's state-owned Pemex has fallen further behind on its exploration and production (E&P) program, falling short on all key metrics for a second consecutive quarter, despite President Andres Manuel Lopez Obrador's commitment to rescue output.

"The statistics look very bad and we have to try and understand why Pemex is not investing," Sergio Pimentel, commissioner at oil regulator CNH, said today.

Pemex invested 6.7pc of the planned budget last year through 1 December for 22 fields originally designed to reboot falling crude and natural gas production, CNH said today.

Pemex invested Ps2.86bn ($152mn) of the Ps42.5bn investment programmed for last year and drilled just two of the 26 planned wells.

Pemex has been struggling to meet its targets since June last year, with just 2pc of the planned budget invested by 31 August and just one of 16 wells drilled, CNH said in October.

Lopez Obrador has made rescuing Pemex a cornerstone of his administration but Pemex's strategy to rapidly start production in 22 recently discovered fields has been criticized for its unrealistic scheduling and the lack of experience among companies that won drilling and infrastructure contracts. The company has approved development plans for just 17 fields.

Pemex has awarded the construction of 15 marine platforms and pipelines at a cost of $1.2bn as well as the drilling of 128 wells in order to develop the 22 fields, according to the company's business plan.

Pemex has also fallen short on its crude and gas production targets, with just 6,000 b/d added, compared with the projected 15,400 b/d. The Ixachi onshore field accounted for 73pc of total crude production and just four of the 17 fields are producing crude so far.

Pemex originally expected production across the 22 fields to hit 320,000 b/d by 2022.

Natural gas production from the fields hit 36.1mn cf/d, compared with the target 52.5mn cf/d, with just four of 17 fields in production.

Pemex, despite being allocated increased E&P budgets last year, failed to spend around half of its budget and several contractors have complained about payment lags of up to six months.

Pemex is also underperforming across acreage assigned to it following the 2014 energy reform and reassigned in August last year.

Of the 258 blocks in production, Pemex drilled just 181 of the 669 planned production wells and spent under half of its Ps258bn allocated investment.

Crude production across the 258 blocks hit 1.61mn b/d, down from the 2.26mn b/d forecast, while gas output reached 3.35 Bcf/d, below the projected 4.45 Bcf/d.

Despite falling short on its targets, Pemex did halt a month-over-month decline in output last year, but year-over-year figures were flat.

Pemex produced 1.677mn b/d in November last year and 1.683mn b/d in November 2018.

Lopez Obrador has pledged to increase crude output to 2.6mn b/d from the 1.68mn b/d produced in November.

 



By Rebecca Conan from Argus Media.

argusmedia.com 01 16
2020

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