Mexican state oil company Petróleos Mexicanos (Pemex) is forecasting a base-case scenario increase of natural gas production to 4.19 Bcf/d in 2021 from 3.64 Bcf/d realized in 2020, according to its newly released 2021-2025 business plan.

Pemex gas production goals

For 2022, Pemex sees production reaching 4.39 Bcf/d before dropping to 4.1 Bcf/d in 2023 and 3.94 Bcf/d in 2024, the final year of president Andrés Maneul López Obrador’s term.

The production ramp-up “reflects the incorporation of new fields, such as Ixachi and Quesqui,” Pemex said.

Pemex has touted the potential of both fields to help reverse years of declining production, though development has been slower than advertised.

Although Pemex has managed to slow the decline in production under the current government, it has not recorded a year/year increase in output since 2009, when full-year average production peaked at 6.53 Bcf/d.

Reflecting the numerous potential headwinds to production, Pemex’s latest business plan also includes a minimum case scenario for production over the coming years, based on “a conservative perspective of variables such as the evolution of the pandemic and the recovery of the economy,” Pemex said.

In this scenario, Pemex production dips to 3.28 Bcf/d in 2021 and peaks at 3.64 Bcf/d in 2022, before dropping to 3.56 Bcf/d in 2023.

As Pemex production has declined, Mexico has increasingly relied on pipeline imports from the United States to meet growing demand for the molecule.

López Obrador also has halted exploration and production (E&P) bid rounds, adding to the pressure on Pemex to drive production growth in Mexico.

Pemex, meanwhile, has historically prioritized oil-directed drilling over less profitable gassy plays.

Mexico’s proximity to the prolific onshore gas-producing basins of the United States “has affected the profitability” of gas-directed drilling in Mexico, Pemex said in the latest plan.

However, Pemex cited the importance of maintaining its natural gas production levels in order to meet its own consumption needs throughout the oil and gas supply chain, and to meet the needs of the country as a whole.

Pemex also is aiming to increase dry gas production from its processing centers to 3.5 Bcf/d in 2021 and 4.16 Bcf/d in 2022. It aims to achieve this goal through increased upstream production by its E&P unit, imports of wet sweet gas to the Burgos processing plant in Tamaulipas state, and processing of gas produced by third-party E&P companies in southeastern Mexico.

As for liquid hydrocarbons, Pemex is aiming to produce 1.94 million b/d in 2021, up from 1.69 million b/d realized in 2020, with production peaking at 2.16 million b/d in 2024.

Pemex’s 2019-2033 business plan had set a goal of surpassing 2.6 million b/d of crude oil by 2024.

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López Obrador has said recently that Pemex is trimming its output goals in order to produce only what is needed to meet domestic demand.

Pemex also said in the latest plan it is aiming to increase domestic sales of fuel oil, which has been a controversial topic for the company.

A recently passed bill to overhaul electricity dispatch rules was decried as a means to ensure that state power company Comisión Federal de Electricidad (CFE) purchased fuel oil produced by Pemex, to the detriment of cleaner, cheaper electricity sources. 

Pemex said it is promoting “agreements with CFE” to use more fuel oil, including the substitution of coal for fuel oil at some CFE plants, which Pemex said would bring “some environmental benefits.”