During 1Q22, the total number of PEMEX wells in operation sat at 6,656, a 4.45 percent decrease from 2021’s 6,959. However, the NOC did break a streak of three consecutive quarters of stagnation, recording an increase of 4.93 percent compared to 4Q21: from January to March, the number of wells producing crude oil and non-associated gas rose to 6,663. During 1Q22, 26 development wells were completed, six more than the same period in 2021. Furthermore, nine exploratory wells were completed, two more than last year.
From January to March, PEMEX’s Exploration and Production arm was actively operating a total of 48 drilling rigs, of which 34 were development wells and 14 exploration wells. This represented a drop of 7.69 percent compared to the 52 drilling rigs in operation last year. In terms of the distribution between offshore and onshore operations, 48 percent of development wells were onshore and 52 percent offshore, while for exploration wells this was 60 percent 40 percent respectively.
In 2021, the volume of total oil reserves, including 1P, 2P and 3P, presented a drop of 2.4 percent compared to the previous year.
During the 36th special session of the National Hydrocarbons Commission (CNH), all of Mexico’s 1P, 2P and 3P hydrocarbon reserves were published. A total of 20 oil companies sent the regulator reports of their reserves compared to 17 last year, as a current sum of 458 oil fields are now accounted for. According to the document made available by the CNH, the volume of certified reserves as of Jan. 1, 2022 amounted to 6.058 billion boe in 1P reserves, 11.21 billion boe in 2P reserves and 16.68 billion boe in 3P reserves. The volume of 3P reserves fell by 2.7 percent in the time since the last CNH certification, from 17.1 billion boe to 16.13 billion boe.
According to information published by the CNH, the volume of certified gas reserves as of Jan. 1, 2022, amounted to 10bcf in 1P reserves, 21,460MMcf in 2P reserves and 31,014MMcf in 3P reserves.
CNH also showed that PEMEX controlled 82 percent of hydrocarbons reserves, with a further 12.59 percent coming from shared production fields, 2 percent from licensed fields. The rest remains unassigned. Of the reserves controlled by private contractors, Fieldwood possessed 37.91 percent, followed by Eni with 21.64 percent and Hockchi Energy with 9.43 percent.
However, without further discoveries, PEMEX's production goals will be a challenge, warns BBVA. The bank indicated that, in keeping with current data, meeting the production goal for 2022 will depend more on PEMEX than on its partners. Although the state oil company’s production has been increasing, BBVA sees the 2023 and 2024 targets as a challenge for the NOC, not only due to decreased investment levels, but also due to the recent lack of important discoveries.
The financial institution pointed out that due to the significant quarterly increase of around 42 thousand bpd in the production of the 30 new fields during January-March 2022, the quarterly advance of only 3,300 barrels per day in the production of liquid hydrocarbons suggests that the strong natural decline in the production of mature fields will continue.
BBVA also suggested that this context likely influenced the decision to revise downward the 2022 oil production target from 1.9 to 1.84 billion b/d.
"Although this new goal could be reached with an average annual contribution of 366Mb/d from new fields and a stabilization in the production of other fields, the production goals of 1.971 and 2.06Mb/d for 2023 and 2024 [respectively] are even more challenging without important discoveries," said the bank in a statement.
Likewise, BBVA Mexico points out the increase in oil production planned for the following years will require much greater amounts of investment set aside for exploration and production. This could also see additional pressure placed on public finances to fund investment for the National Refining System, as well as a return to unconditional government support to PEMEX’s debt amortization.
The bank noted that oil production from new developments averaged 330Mb/d in 1Q22, compared to 288Mb/d in the previous quarter.
"To reach the oil production target of 1.84Mb/d by 2022 and assuming that production from mature fields stabilizes, the new fields would have to produce an average of around 378Mb/d between April and December 2022," detailed BBVA.
In fact, PEMEX figures, valid as of March 31, 2022, indicate that production from these new developments had reached 355Mb/d. BBVA indicated that while the NOC’s oil production has grown in the past six quarters, it is also important to analyze the contribution made by PEMEX's partners and producers of condensates.
Indeed, the production of liquid hydrocarbons increased by 39.7Mb/d in 1Q22 against the same period last year, an increase which BBVA believe can be explained by a higher daily output in the production coming from PEMEX, partners and condensates.
"PEMEX's significant contribution of 56.3 percent to this increase leads us to believe that meeting the production target for 2022 will depend to a greater extent on PEMEX than on its partners. For this, it will be key that the development of new oil fields continues so that they can contribute an additional 21,000 boe per quarter on average between April and Dec. 2022,” concluded BBVA.