Ku Maloob Zaap is expected to decline

Experts now anticipate that flagship shallow water Pemex asset Ku Maloob Zaap (KMZ) is headed for a decline that will mirror that of mature field and previous offshore giant Cantarell. The largest contributor of barrels to Mexico’s production levels, at over 754Mb/d of the 1.7MMb/d of national production measured by the National Hydrocarbons Commission (CNH) as of November 1st 2019, KMZ is feared to soon begin a precipitous decline as it enters the secondary recovery stage.

In statements made to Reforma journalist Karla Omaña, IHS Markit analyst Alejandra León claimed that “we are seeing that KMZ will enter a phase of yearly production decline that will vary from eight to ten percent”. A decline of this rate would put KMZ on a path similar to that of Cantarell, currently producing around 160Mb/d which represents a 74.2 percent drop over the last ten years according to figures from the Ministry of Energy (SENER).

The KMZ asset is composed by three main fields, Ku, Maloob and Zaap, and two ancillary additional fields Bacab and Lum. The enormous offshore complex that houses their production facilities is located a few miles away from the coasts of Campeche and Tabasco, representing together with Cantarell the crown jewels of the Campeche Basin oil and gas area. Cantarell entered its declining mature field phase after accelerated exploitation made it reach its highest production levels during the Vicente Fox administration, becoming the central contribution to the all-time high in national production levels reached in December 1 2003 of 3.454MMb/d (according to CNH).

Independent energy sector specialist Arturo Carranza said KMZ was still in time to avoid a case of mismanaged decline like Cantarell. Carranza also commented on PEMEX’s strategy to prioritize 20 fields for development in order to restore production levels: “The fundamental problem is that the business model being used for development, primarily based on integrated service contracts, might not represent the best options to develop these fields quickly enough.”

Due to these deficiencies, the vital role of large assets such as KMZ might not be offset by these other fields in time, creating an additional incentive to manage declines as carefully as possible. CNH figures demonstrate that while the KMZ asset currently presents no obvious large decline, having reached its current levels after a relatively minor decrease from over 780Mb/d in December 1 2008, its Ku field might hold the key for what to expect from the asset during the coming years. December 1 2008 was also Ku’s peak, reaching production levels of almost 384.5Mb/d. Now, its production is the lowest of the three main fields, having reached little over 76Mb/d in November 1 2019. Maloob and Zaap’s production levels have risen to pick up its slack, and perhaps an even similar rise could be expected in the future for Bacab and Lum, but Ku’s trajectory might represent the future for all of them just like Cantarell might represent the future for the asset as a whole.