Management at Mexico’s Petróleos Mexicanos (Pemex) thinks its strategy to focus on 20 new priority fields is starting to pay dividends, with 123,000 b/d of new production added from 15 producing areas by the end of September.
Thirteen wells were drilled at the priority fields during the third quarter, and the company will complete and start production from 27 additional wells in the fourth quarter, executives said Wednesday in an earnings call.
Production was led by the southeastern Mulach, Queschi and Ixachi fields. The latter two are natural gas-rich.
Exploration during the quarter added 600 million barrels of oil equivalent from Quesqui and Ixachi in 3P (proved, probable, possible) reserves.
Pemex CEO Octavio Romero participated in the earnings call for the first time since assuming the role almost two years ago. Calling it “one of the trickiest years in history,” he highlighted the progress at the new fields and the fact that the company was halting 14 years of production declines.
He said that Pemex was the biggest company in Mexico and biggest contributor to public finances. The company’s oil and gas production accounted for 4% of gross domestic product in the quarter.
Pemex posted a slim profit of $65 million in Q3 after posting a $2 billion loss in Q3 and a $22 billion loss in Q1. The profit was attributed to gradual oil price improvements, and foreign currency and financial instrument gains.
Overall production in the third quarter fell to 1.658 million b/d compared to 1.694 million b/d in the third quarter last year.
Pemex’s acting director of E&P Francisco Flamenco said that production cuts in May and June due to an agreement with the Organization of Petroleum Exporting Countries (OPEC) and its allies impacted third quarter production as mature wells were taking time to come back online. He sees production returning to pre-OPEC levels by the end of October.
Despite gains at its new fields, Mexico remains short of its revamped production goals. Mexico’s government has said it aims to hit oil production of 1.8 million b/d this year, with a 100,000 b/d increase every year to reach 2.2 million b/d in 2024, when the current administration’s term comes to an end.
Natural gas production in the third quarter was 3.680 Bcf/d, down from 3.685 Bcf/d last year.
Non-associated gas was up by 58 MMcf/d in the quarter year/year, attributed principally to Ixachi.
Flaring continued to be an issue in the third quarter, with gas utilization falling to 89.5%. Lower gas utilization is explained by high nitrogen content in the gas produced in the northeast marine region.
Lifting costs in Mexico are expected to fall to $12/bbl at Pemex fields by the end of the year, from $13.7/b in 2019.
Flamenco said lifting costs at the priority fields were as low as $4-5/bbl.
Refinery throughput fell again during the quarter due to maintenance at Tula. Throughput at the nation’s five depleted refineries was 605,000 b/d in 3Q, compared to 657,000 b/d in the same period last year.
Mexico’s largest infrastructure project is the $8 billion Dos Bocas refinery in Tabasco state, which is being financed entirely by public funds.
Pemex, which has over $100 billion in debt, has been slammed by the coronavirus at its operations. As of Tuesday, 346 workers had died as a result of the virus.
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