STORY INLINE POST
The long term plans for the development of Mexico’s oil and gas sector hinge on two main objectives: ensuring long term sustainability by maintaining a healthy reserve replacement rate, and the increasing crude oil production. Specifically, by 2016, Pemex aims to increase its production to 3 million bbl/day, from the 2011 production rate of 2.55 million bbl/day. In 2011, the company achieved its goal of raising the rate of reserve replacement to above 100%, by achieving a 101.1% replacement of 1P reserves. From now onwards, Pemex is committed to achieving 100%+ every year.
Trying to achieve an extra 450,000 bbl/day of production whilst simultaneously maintaining its reserve base will be no easy feat for Pemex, and the plan will require some serious capital investment in both exploration and production to be successful.
Pemex’s plans for deepwater stretch far past 2012, as it will take years for the company to get into a position where it can comfortably exploit deepwater resources to their maximum potential. Once the 2012 exploration campaign is complete, the NOC should have a better idea of size of oil deposits located at these extensive water depths.
Although Pemex is keen to move to oil discoveries in deepwater, it is also evaluating its shale gas potential. As a commodity, gas is currently not too attractive in comparison to oil, given the Henry Hub natural gas price of US$2.25/MMBtu as of April 2012, but in the long-term, there is the potential to decrease Mexico’s dependence on imported natural gas.
Gustavo Hernández García, Subdirector of Planning and Evaluation at Pemex E&P, says that Pemex cannot ignore its shale gas resources, despite its desire to find more oil reserves, simply because of the fact that around the world, shale gas and unconventional resources in general are changing the shape of the oil and gas industry, making countries that were previously major gas importers less dependent on the reserves of other countries. He explains that once the country’s shale gas potential resources become bookable reserves, then Mexico can start discussing the best way to exploit these reserves – be it through contractors, third parties, field labs or integrated service contracts. The drilling of wells in 2012 should be a good beginning to this process, but it will be a few years yet before Pemex determines its long-term strategy for exploiting its unconventional resources.
The next few years for Pemex and Mexico will be extremely interesting. 2012’s events will set the stage for 2013, a year when Pemex should be well on track to getting itself back on the list of the most influential oil companies in the world.