Image credits: @pemex
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Weekly Roundups

Dos Bocas’ Costs Soar

By Conal Quinn | Thu, 08/25/2022 - 00:02

Among this week’s top stories, the cost of the flagship Olmeca Refinery at Dos Bocas keeps on rising amid calls for greater accountability, while CNH issued PEMEX a record fine for excessive gas flaring at the NOC’s Ixachi field. 

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

 

Mexico:

 Dos Bocas’ Costs Increase by US$6.5 Billion

Documents uncovered this week by Reuters show that PEMEX’s Board of Directors met to determine if further investment was needed to cover the cost of works still due to take place this year at the government’s prized Dos Bocas refinery. With a majority, although not with an unanimous vote, the NOC´s Board of directors made the decision to request a further US$5.618 billion to cover the cost of construction yet to take place, and a further US$853 million to get the Olmeca refinery up and going.

 

CNH Fines PEMEX for Gas Flaring at Ixachi

CNH has imposed a heavy fine on PEMEX for excessive gas flaring at the NOC’s Ixachi priority field. The fine, issued by the regulatory body on PEMEX in recent weeks, is understood to be in excess of MX$40 million (US$1.98 million). While the Mexican hydrocarbons law sets a limit for fines of this nature, this latest figure is believed to be the biggest ever handed out. Lawyers representing PEMEX have already announced they will be challenging Ixachi's penalty determination.

 

PEMEX’s Export Value Increases 59 Percent in 1H22

Mexico’s state oil company PEMEX gained better financial results from exporting crude in the first half of the year due to the increase in oil prices at the international level, according to official reports and industry analysts. Nevertheless, this trend is not expected to continue throughout the remainder of 2022.

 

Mexico Bets Energy Future on Oil Rather Than Renewables: NYT

While the world is betting on the clean energy transition to combat climate change, Mexico is putting its chips on rescuing its oil industry as the backbone of its energy policy. At a time when scientists are sounding the alarm about the need to move away from fossil fuels that contribute to catastrophic global warming, Russia's invasion of Ukraine has spurred a global trend toward oil and gas production to secure the supply of fuels in the face of Russia's production blockade.

 

Shell To Drill in Mexican Ultra-Deepwater 

This week, CNH gave Shell the go-ahead to drill an exploratory well in ultra-deep waters off the coasts of Veracruz and Tabasco. The drilling of Aluk-1EXP will take place within contractual area CNH-R02-L04-AP-CS-G04/2018.

 

Iberoamericana de Hidrocarburos to Drill in Nuevo León, Tamaulipas

CNH gave Iberoamericana de Hidrocarburos authorization this week to drill three onshore exploratory wells, Sabinito Sur-101EXP, Aquiles-201EXP, and Llano Blanco-1001EXP, at a play located on the border of between the states of Nuevo León and Tamaulipas, just over 50km southwest of Reynosa. Here, the company expects to find 13.6MMboe.

 

Oil Rises Over US$1/b Due to Supply Shortages

Oil rose more than a dollar a barrel as supply shortages came back into focus when Saudi Arabia floated the idea of ​​cutting OPEC+ output to support prices and the prospect of a drop of crude oil inventories in the US emerged. Even though Mexico’s export prices do not necessarily follow the trends set by Brent and WTI crude to a tee, PEMEX continues to benefit from higher oil prices as well.

 

International:

TotalEnergies Co-owned Venture Helped Fuel Russian Military, Says Le Monde

TotalEnergies is involved in supplying gas condensate to make jet fuel that may have been used by Russia´s military in Ukraine via the French firm's stake in a venture with Russia´s Novatek, Le Monde reported. 

US Henry Hub Gas Prices Climb to Record High

US Henry Hub prices have climbed to a record high, Rystad Energy analyst Lu Ming Pang highlighted in a market note sent to Rigzone on Wednesday. The commodity almost hit the US$10/MMbtu mark for the first time. Henry Hub has typically averaged from US$2 to US$4/MMbtu in previous summers.

Australia Launches 2022 Exploration Round, Awards CCS Blocks

The Australian government launched its 2022 offshore exploration licensing round and also awarded the country's first offshore blocks for potential greenhouse gas storage.

Saudi Arabia’s Oil Export Earnings Hit Six-Year High in June

Saudi Arabia’s oil exports reached US$31 billion in June, the highest in at least six years, driven by a rally in prices and rising production. Monthly crude exports topped more than US$1 billion/d and jumped 94 percent year-on-year, the kingdom’s statistics office said on Wednesday. Second-quarter oil exports were more than US$91 billion, or 80 percent of total exports.

Photo by:   @pemex
Conal Quinn Conal Quinn Journalist & Industry Analyst