As the upstream sector will remain active in 2023, the beginning of the year will be decisive for private oil companies to decide their further strategy on their assigned blocks. PEMEX will also remain active in this sector as it was assigned a larger budget for exploration than in 2022. Furthermore, the company will invest to further support Mexico’s fertilizer production plants and support small farmers.
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Mexico will continue to import natural gas in 2023 due to its declining production, which fails to meet the growing demand for the fuel, which ranks as the most consumed in the country since 2014. The dynamism experienced by natural gas has been boosted by the electricity industry, which quadrupled its demand for the fuel between 2000 and 2019, raising Mexico’s demand for natural gas by 95 percent during this period. Drilling by private operators and PEMEX will increase during 1H23 as companies rush to meet their commitments by the end of the year.
The Mexican oil and gas upstream sector will remain active in 2023, with private companies ramping up exploration and production. However, the sector will face a shortage of rigs and PEMEX will remain under pressure, warns S&P Global. The upcoming months will play a crucial role for private companies to decide whether to continue their exploration activities. PEMEX will spend MX$404 billion (US$20.2 billion) for exploration and production in 2023.
PEMEX will invest about MX$15 billion (US$750 million) to revamp Mexico’s fertilizer production plants to support small farmers. According to the company, PEMEX-owned companies Pro-Agroindustria and Grupo Fertinal will no longer import fertilizers by the end of 2024. President Lópex Obrador also announced that the Fertilizers for the Well-Being program will expand, benefiting over 2 million small farmers.
Key figures in Mexico’s energy regulatory bodies stepped down. How this shakeup will affect the agency’s operational effectiveness remains in the air. The Energy Regulatory Commission’s (CRE) Guillermo Pineda Bernal announced that he was stepping down from his post. He was considered to be friendly to the pro-market reforms of 2013-14 made during the Enrique Peña Nieto administration. Similarly, National Hydrocarbons (CNH) Commissioner Alma America Porres Luna ended her six-year tenure, leaving the institution with three commissioners for the second time when it needs at least four to hold sessions or issue ruling and authorizations.
PEMEX will hire all its temporary workers in permanent positions by the end of 2024, said CEO Octavio Romero. The state-owned company will prioritize its longest-time employees, contrary to what used to happen in the past when union leaders preferred to offer permanent jobs to less senior workers.
On the back of market volatility in the first days of 2023, fuel prices increased. The government announces that IEPS subsidies have therefore returned. While Premium gasoline did not have any discount the past week, this week it will have a 29.1 percent discount on the IEPS.