The depletion of Mexico’s producing oilfields will likely outpace new production brought online from 2019-2024 unless the government shifts course, according to analysts at GlobalData.

“Mexico’s upstream revitalization is conditional to the strategy adopted by the government,” analysts Adrian Lara and Gregory Bosunga told NGI’s Mexico GPI. “The current strategy based on ramping up onshore and shallow water mature or inactive fields is inadequate to revitalize the sector in the mid-term.”

GlobalData provided a list of 14 projects — seven operated by national oil company Petróleos Mexicanos (Pemex) and seven by the private sector — with startup dates between 2019 and 2024 that could, in theory, supply 756,000 b/d of new crude production by 2024.

However, the Pemex projects, which account for 313,000 b/d of the total, “are contingent to financing from the government,” the analysts said. “The current financial outlook is not particularly strong. The company’s strategy was deemed not sound and already brought them a downgrade of its credit score by Fitch Ratings.”

Fitch last week lowered by two notches the long-term foreign and local-currency issuer default ratings (IDRs) for Pemex to “BBB-” from “BBB+,” and downgraded Pemex’s national long-term ratings to “AA (mex)” from “AAA (mex),” with a negative rating outlook. The downgrades “reflect the continued deterioration of Pemex’s standalone credit profile (SCP) to ”CCC’ from the previous assessment of ”B-” as a result of persisting negative FCF [free cash flow] and material under-investment in the company’s upstream business,” Fitch said.

Fitch credit ratings analysts expect production and hydrocarbon reserves “to continue declining over the medium term and to potentially stabilize after three to five years” as capital expenditures are not enough to replenish reserves.

Discoveries that include Ixachi, which added an estimated 1.3 billion boe of proved, probable and possible reserves, “may help offset somewhat the company’s production and reserve decline but are not enough to reverse the declining trend,” Fitch analysts said.

The GlobalData analysts said they expect the current producing fields to decline by 680,000 b/d by 2024, “eating through any potential upside gained. For production targets to be met, the Mexican government must consider integrated strategies in the upstream sector where production growth is diversified amongst the national oil company and a large pool of participants.”

GlobalData’s list includes 12 oil-heavy projects and two natural gas-rich plays. The gas projects, Ixachi and Koban, are operated by Pemex and expected to come onstream in 2020. Together, the two projects could supply between 700 MMcf/d and 1 Bcf/d of gas output by 2024, according to GlobalData.

Associated gas from the other 12 oil projects could reach between 800 MMcf/d and 1.2 Bcf/d, analysts said.

President Andrés Manuel López Obrador in December stated a goal of increasing Pemex oil output to 2.4 million b/d from 1.7 million b/d currently by the end of his term in 2024. Pemex CEO Octavio Romero Oropeza, meanwhile, said that he expected gas production, which averaged 3.8 Bcf/d in December, to rise by 50% over the same time span, mainly driven by associated gas from the incremental oil production.

Associated gas accounted for 74% of Pemex’s gross gas production in December.

GlobalData’s Lara and Bosunga said that offshore fields awarded under the framework of Mexico’s 2013 constitutional energy reform, such as BP plc’s Hokchi, Eni SpA’s Amoca-Mizton-Tecoalli, Talos Energy Inc.’s Zama and BHP’s Trion, are on track to produce more than 250,000 b/d of oil by 2022.

López Obrador has placed a three-year halt on bid rounds, and postponed from February to October a farmout auction for stakes in oil and gas fields operated by Pemex.