Global Outlook Remains Uncertain; Hokchi Begins ProductionBy Peter Appleby | Thu, 05/28/2020 - 19:47
The global oil and gas industry is still in the process of finding its feet following the near knockout-blow delivered by COVID-19 over the past few months. The future of global exploration is uncertain, while recent developments have called into question the necessity of a new refinery in Mexico. Best of all, Hokchi began production in the shallow waters of Tabasco.
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Wall Street’s bond investors are still willing to put their money into PEMEX, despite its recent poor performance. They reason? The unflinching support from Mexico’s government for the NOC. But according to credit agencies, the closeness between the federal government and PEMEX is not always a benefit.
Oil’s price collapse following the COVID-19 pandemic will undoubtedly have far reaching consequences for oil and gas. One of these will be in exploration, as low prices make it difficult for IOCs to justify exploration expenses. But where and when exploration cuts will be implemented by companies is still undecided.
PEMEX is showing a rise in its production metrics for the beginning of the year and oil prices are showing early recovery from negative pricing following the reopening of some economies. But at the pump, PEMEX’s woes continue. A huge drop in April pulled down the company’s sales volumes to levels not seen since 1990. PEMEX will be hoping that Mexico’s reopening happens more quickly.
Hokchi entered early production recently, opening its Hokchi-4DEL well in the shallow waters off the Tabasco coast. The Mexican subsidiary of Pan American Energy has created 4,500 direct and indirect jobs from its development so far and invested around US$1 billion into its Hokchi Field. It should reach 15MB/d by the end of the year, says AMEXHI’s Merlin Cochran.
Refineries around the world shut down as prices hit rock bottom. Some remain closed, despite increasing demand. The Dos Bocas construction is yet to hit the halfway mark and demand is expected to reach close to pre-pandemic levels within the next few years. But has the pandemic’s impact fundamentally changed the industry landscape and lessened the need for new refineries?