Editor’s Note: This is one of a 14-piece series NGI undertook as the energy industry readied for the new year, with Lower 48 natural gas and oil supply continuing to surge in an uncertain environment as liquefied natural gas exports ramp up, Mexico markets remain shrouded and stakeholders demand more value. Get your complimentary copy of NGI’s 2020 Special Report today.
Both skeptics and proponents of Mexico’s new state-centric energy policy will be closely watching state oil company Petróleos Mexicanos (Pemex) in 2020 as it seeks to fulfill President Andrés Manuel López Obrador’s mandate to reverse years of declining oil and natural gas output.
In terms of natural gas, the most relevant indicator will be the pace at which Pemex develops the Ixachi onshore gas and condensate field in the Veracruz Basin.
Pemex has allocated more than $1 billion in capital expenditures (capex) in 2020 for Ixachi, the most significant gas-focused project in the company’s exploration and production (E&P) portfolio.
“Historically, Pemex has never developed in any meaningful way, natural gas fields per se,” Mayer Brown LLP’s Jose Valera told NGI’s Mexico GPI. “Most of the natural gas produced in Mexico is associated to the production of crude oil. Crude oil was always prioritized because it generated export revenues for the treasury.”
Non-associated gas plays, therefore, were “not economically attractive to Pemex or the government, and consequently, those fields were not developed.”
To read the full article and gain access to more in-depth coverage including natural gas price and flow data surrounding the rapidly evolving Mexico energy markets, check out NGI’s Mexico Gas Price Index.