Banxico Says No to Paying PEMEX’s DebtBy Cas Biekmann | Thu, 11/26/2020 - 16:35
PEMEX’s proposal to pay its debt with national reserves has been rejected by Banxico, as the NOC struggles to meet its 2020 oil production targets. In other news, CNH has approved Talos Energy’s 2021 plans for the Zama field. Read this and more in the weekly oil and gas roundup!
Banxico Rejects PEMEX Proposal Aiming to Pay Off Oil Debt
Banxico said PEMEX’s proposal to use a portion of its international reserves to pay off oil debt is not feasible. In November, Mexico’s international reserves totaled US$194.361 billion, reported El Economista. Banxico considers that the loan proposal is not feasible according to the bank’s Art. 19 and 20, which state that the reserves can only be invested in assets considered first-rate in international markets, denominated in foreign currency and by governments other than Mexico’s. Furthermore, PEMEX bonds are not considered ‘safe’, as the NOC has been crossing unstable financial territory. This results in non-compliance with the requirements and conditions needed for a Banxico investment.
PEMEX Unlikely to Meet 2020 Oil Production Target
PEMEX´s crude oil production and that of its partners experienced a reduction of almost 1 percent, or 16Mb/d, in October, reaching 1,627MMb/d. According to El Economista, this implies an annual drop of 1.7 percent, or 28Mb/d. The reduction followed two months of production increases, after PEMEX had its worst production levels in 40 years last July. Octavio Romero, head of the NOC, stated that the average production in 2020 would be 1,714MMb/d, meaning current oil extraction is 50Mb/d lower. Furthermore, Forbes reported that PEMEX is considered a liability to the Mexican state by HR Ratings. BBVA suggested the NOC change its approach to not affect Mexico’s credit ratings.
CNH Approves Talos Energy’s Zama Plans for 2021
The commission approved Talos’ work program and budget for the exploration plan, concerning contract CNH-R01-L01-A7 / 2015 in 2021 corresponding to the important Zama field. Furthermore, Talos Energy will carry out safety, health and environmental activities in the Zama field, with an authorized budget of US$875,540 reported Milenio. The works will include the drilling of wells and preparing for their abandonment.
PEMEX to Allocate US$67 million for New Wells; PMI Assigned Marketer of Oil Contracts
CNH authorized the drilling of two wells in the Mexican Gulf and decided that PEMEX International (PMI) is the new marketer for oil contracts. The commission granted PMI the right to commercialize hydrocarbons that the state obtains as a result of the exploration and extraction contracts with private companies, Forbes reported.
Furthermore, Forbes reported that CNH authorized the drilling of the wells Saap-1 EXP and Copali-1EXP in the Mexican Gulf waters. PEMEX will invest US$67 million for the exploration and production of these wells.
US Oil Industry Under Pressure Despite Pandemic Support
Quartz reported that the US oil and gas industry has received over US$10 billion in government support to help fight the pandemic. Nonetheless, the industry keeps facing trouble as barrel prices hover around US$40.