Agreement Pushes Prices Up; Fracking Reconsidered?By MBN Staff | Thu, 12/10/2020 - 17:21
In another week of frantic news coverage, drama around next year’s global production targets eventually subsided as OPEC+ came to an agreement for January 2021. Meanwhile, CNH authorized fracking for PEMEX in Tampico-Misantla, PEMEX was reported to have become unactive in low-emissions group, Grupo Protexa set up in Coatzacoalcos and Mexico’s dependence on US gas is set to go on, says AMLO.
All this and more in The Week in Oil and Gas.
OPEC+ came to an agreement on production cuts for the beginning of next year after a tough week that saw the initial meeting rescheduled and Saudi Arabia considering resigning its position as chairman of the group.
OPEC+ nations announced that they would introduce 500Mb/d back into the market in January, reducing the current 7.7MMb/d output reduction to 7.2.MMb/d.
Markets reacted positively with Brent reaching US$49.92 per barrel, WTI rising to US$46.20 per barrel and Mexico’s crude basket also seeing climbing rates.
OPEC+ said that nations would meet again in the New Year to review global market decisions. Energy Minister Rocío Nahle represented Mexico and was the only female among the OPEC+ leaders.
PEMEX is no longer active in the Oil and Gas Climate Initiative (OGCI) group. Mexico’s NOC has not left the group but has had no recent active participation. The OGCI’s recent annual report did not include PEMEX as a member because it only reports on those companies that are actively involved.
The OGCI is attempting to reduce carbon emissions in the upstream sector and works together with major IOCs and service companies, including ExxonMobil and Chevron Corp. PEMEX was considered to be Latin America’s most polluting company, according to a study carried out by UK newspaper The Guardian.
Mexico is attempting to reduce its natural gas reliance on its northern neighbor with underground storage facilities like the Caverna Salinas but President Andrés Manuel López Obrador has said that the country will receive the majority of its gas from the US for some time.
SENER’s Five-Year Expansion Plan for the Natural Gas Transportation and Storage System 2020-2024 showed that Mexico imports 80 percent of its natural gas, 90 percent of which is comesfrom the US. While recent PEMEX discoveries like Ixachi, as well as other fields like Lakach, should provide sound gas reserves for the future, private players are also doing their bit. At Mexico Oil & Gas Summit 2020, Jaguar E&P’s Warren Levy said that the company’s 12.5Bcf reserves “represent 50 years of all residential consumption in Mexico.”
CNH authorized an alteration to PEMEX’s Tampico-Misantla exploration strategy that would allow the company to frack if government policy was changed. The president has repeated his opposition to the controversial method various times and said he would not allow it during his premiership. However, fracking does happen in Mexico and PEMEX requested US$10 billion (US$523 million) in the 2020 Budget Proposal to continue fracking in shale gas areas including the basins of Sabinas, Burgos and Tampico-Misantla, as well as 29 productive fields in Veracruz and Puebla.
Grupo Protexa, one of Mexico’s oldest oil and gas companies, is setting up a Strategic Fiscal Regime area (RFE) in Coatzacoalcos, Veracruz, which will boost interest in oil and gas ventures, as well as the Interoceanic Corridor of the Isthmus of Tehuantepec (CIIT). The RFE site will cover 1.84ha and enable companies to import, export and store goods for the next five years without paying foreign taxes or fees.
In August, the possibility of creating a new natural gas market via the Transithmic project, which will run between Salina Cruz where a PEMEX refinery is located, and Coatzacoalcos, where a major port is located, was introduced. Grupo Protexa is already meeting with an unnamed Italian company in the petrochemical industry about the new site.