BP Leaves Mexican Upstream Sector; PEMEX Invests in ESG Efforts

Among this week’s top stories, supermajor BP is finalizing terms with CNH to pull out of Mexican upstream sector, while PEMEX takes measures to improve its ESG record by investing in infrastructure to reduce flaring at priority field Ixachi and breaking a Guinness world record for drilling, in an effort to minimize the environmental impact of its activities in Tabasco.

For all this and more, here is the week in oil and gas!

Mexico:

BP Pulls Out of Upstream Activities in Mexico

One of the world’s largest energy companies is set to pull out of upstream activities in Mexico, having only entered the market six years ago. Supermajor BP won three exploration contracts during the bidding rounds held in 2016 and 2018 under the previous administration of Enrique Peña Nieto. Of these contracts, CNH-R01-L04-A1.CS/2016 and CNH-R01-L04-A3.CS/2016 are deepwater blocks located in the Salina Basin off the coasts of Veracruz and Tabasco, while CNH-R03-L01-G-CS-03/2018 relates to a play in the shallow waters of Campeche.

Mexico Has 64.5 Billion boe in Unconventional Reserves: CNH

The National Hydrocarbons Commission (CNH) published data revealing Mexico’s prospective resources in unconventional plays to total 64.2 billion boe for 1Q22. Oil reserves from conventional reserves amounted to an estimated 35.9MMboe, of which 97 percent is located in the Tampico-Misantla basin, 1.5 percent in Sabinas-Burro-Picachos and the remainder in the Veracruz basin. Meanwhile, natural gas prospective resources from unconventional plays were put at 141.5tcf. Of this figure, 47 percent is to be found in the Sabinas-Burros-Picachos basin with 38 percent in Burgos and 15 percent in the Tampico-Misantla basin.

Pantera to Invest up to US$11 Million in Pasuku Appraisal 

This week, the National Hydrocarbons Commission (CNH) approved an appraisal program put forward by Pantera E&P for its Pasuku discovery.  The 17.9km² area designated for evaluation lies within contract CNH-R02-L02-A10.CS/2017, located on the southern border of the Macuspana oil region in Tabasco’s Southeast Basins.

PEMEX To Invest US$2 Billion To Reduce Flaring at Ixachi

PEMEX has announced it is to invest US$ 2 billion in an attempt to reduce the amount of gas lost through flaring at Ixachi. The investment plan will comprise both PEMEX’s own resources as well as international credits for the refurbishment of the Papan Measurement and Control Station (EMC). This news comes after energy regulator CNH announced in May it was investigating the NOC for excessive flaring at the Ixachi field. As Reuters reported at the time, satellite data appeared to corroborate the claim that the area around Ixachi had become one of the world’s largest sites for gas flaring.

PEMEX Allots US$186 Million for Exploration in Campeche

CNH has granted authorization to PEMEX to modify the exploration plan for Assignment AE-0166-M-Campeche Oriente. The shallow-water prospect covers an area of 1,343km² and is located in the northeastern portion of the Pilar Reforma-Akal geological province and the western portion of the Yucatan Platform. 

Mexico Reduces Fiscal Stimulus to Gasoline, Consumers To Pay IEPS

The Mexican Government will reduce the tax incentive for Magna gasoline, the most popular fuel in the country, matching a drop in international oil prices. Consumers of this fuel will now be paying part of the Special Tax on Production and Services (IEPS).

 Hokchi Energy Granted Extension To Evaluate Xaxamani

Hokchi Energy was granted a 39-day extension to evaluate the Xaxamani exploratory well, located in shallow waters off the coast of Veracruz.  The 260.7km² area, which is believed to contain oil and gas reserves between 21° and 25° API, falls under shared production contract CNH-R03-L01-AS-CS-15/2018 that the company operates with US corporation Talos Energy as a partner. Hokchi attributed the delays in its appraisal activities of the Xaxamani-2EXP to unforeseen damage caused to drilling equipment in the evaluation area. The Mexican arm of the Argentine E&P company Pan American Energy explained that equipment had to be replaced to prioritize health and safety. 

 PEMEX Boasts a World Record-Worthy Drilling Feat

PEMEX CEO Ocatavio Romero took to social media to document an ongoing drilling operation stretching across an unprecedented distance of 2.1km. Romero explained that the horizontal drilling program is laying the preparations for a 24-inch oil pipeline that is to be installed in the shallow waters off the coast of Campeche, facilitating the subterranean transport of 30Mb/d of oil and connecting three offshore wells with the onshore Rabasa Separation Battery. 

International:

Global Oil Prices To Fall To US$70/b By End Of 2024

Global oil prices are expected to fall to almost US$70/b by the end of 2024 according to Moody's Analystics in a recent report released on the Asia Pacific (APAC) region. 

US Shale Operators Not Capitalizing on High Crude Prices

US shale oil producers are in line to suffer more than US$10 billion in derivative hedging losses this year if oil prices remain around US$100/b, Rystad Energy research shows.

Aramco Kicks Off Chase for Expansion Project on One of World’s Largest Offshore Oilfields

Company plans to add 700Mb/d of incremental oil capacity at Safaniyah, according to chief executive Amin Nasser.

Biden Signs Landmark US Climate and Energy Investment Bill, Aiming To Cut GHGs

The approval of the Reduction Act on Aug. 16, 2022, cleared the way for US$370 billion in energy security and climate change spending over the next decade, with the intention of spurring innovation in clean energy and transportation manufacturing, as well as driving down greenhouse gas emissions.