According to the International Energy Agency (IEA), Mexican oil production will decrease over the next five years due to both the reduction in state investments and the limited activity of private companies, which rely heavily on the development of fields they have managed to secure in the country.
A drop of 500Mb/d or 33% in the extraction of all hydrocarbon liquids (crude oil, condensates and gas liquids), will make Mexico the country with the largest percentage reduction among those outside the OPEC. From January to July, national crude oil production reported by CNH, including condensates production, averaged 1.944MMb/d. Among OPEC members, Russia's production is expected to fall from the current 9.6MMb/d to 9MMb/d in five years, a reduction of 5.5% or 600Mb/d.
The international organization stated in its document, "Oil 2023, Analysis and Forecast to 2028," that the long-term decline in Mexico's oil production shows a brief respite in 2022-23 as the Quesqui field ramps up. Fleetwood Energy's Ichalkil-Pokoch project has been running continuously since its inception, as well, while Eni's Area 1 has shown consistent increases in volumes since the FPSO Miamte platform was put into service in 2022. In addition, Eni and Wintershall Dea's recent major discoveries have added to these successes.
“To slow the decline in the following years, it will be crucial to put the Zama and Trion fields into operation," the IEA stated. "Equinor's departure from the country and Shell's series of dry holes have raised doubts about Mexico's long-term growth prospects." The country will not have new oil developments until new areas are awarded, as the state has limited resources to maintain all its exploration activities and has already initiated accelerated production of new fields, which will take time to start up.
At the same time, the giant reservoirs that the country has relied on are on a natural decline trajectory that cannot be halted, with no alternatives to replace the production they contribute to the national total.
Recently, Chevron announced that it is abandoning a deepwater block off the coast of Tabasco due to unfavorable prospects for the block. The block was managed by a partnership with PEMEX and Inpex. Repsol is also joining in abandoning assets, opting to relinquish another shallow-water block. A spokesperson for Repsol mentioned that the company still holds a deepwater block in the Gulf of Mexico, while Chevron will maintain an office in Mexico to monitor the industry’s development.