PEMEX Faces Restructuring Process

Rocío Nahle resigned from her post as Minister of Energy to run for the governorship of Veracruz. Meanwhile, President López Obrador proposed further tax cuts for PEMEX, as well as a restructuring of the NOC’s subsidiaries.

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Oil Refining Achievements During Rocío Nahle’s Mandate

Rocío Nahle, the former Minister of Energy, has resigned from her post to run for the governorship of Veracruz. During her tenure, she aimed to boost oil refining and construct a new refinery in Tabasco. Despite some improvements, Mexico’s oil refining capacity remained below targeted levels due to challenges in processing heavy crude and increasing fuel oil production. The Dos Bocas refinery project faced cost overruns and skepticism about meeting production targets.

AMLO Proposes Further Tax Cuts for PEMEX

President Andrés Manuel López Obrador aims to further reduce Mexico’s oil state-owned company, PEMEX’s, tax burden by lowering Shared Profit Right (DUC) payments below the 35% proposed in the 2024 budget. This reduction follows a gradual decline during López Obrador’s administration from a maximum of 65%. PEMEX’s CEO, Octavio Romero, reported a 17.8% reduction in the company’s total debt to US$106.3 billion by September 2023.

PEMEX Boosts Budget for Ek-Balam Amid Repairs

PEMEX plans to increase the budget for the Ek-Balam oil contract by 26% in 4Q23, allocating approximately US$442.17 million to the field. This expansion covers ongoing repairs and maintenance due to infrastructure issues at the shallow-water fields. This adjustment comes after an oil spill in August, which the company's CEO, Octavio Romero, downplayed, while environmental experts deemed of significant impact. To maintain production, PEMEX has received approval from CNH for modifications to the 2023 work and budget plan for Ek-Balam.

PEMEX Cuts Subsidiaries Amid Restructuring Effort

PEMEX has reduced its subsidiary companies by 46.3% with aims to take this to 61% by the end of its six-year term. Starting with 95 subsidiary companies at the beginning of the administration, PEMEX plans to cut its subsidiaries to 37. This restructuring involves merging subsidiaries, leading to the existence of only four Productive Subsidiary Enterprises (EPS): Exploration and Production, Industrial Transformation, Logistics and Corporate. This streamlining of operations is part of a broader strategy to improve efficiency and reduce costs.

Shell Fined Over Abandoned Block

Shell is facing a fine of US$732,027 imposed by CNH for abandoning a contracted area (CNH-R02-L04-AP-CS-G02/2018) in Mexico. Shell terminated the contract prematurely, leading to this conventional penalty. The contracted area was in the exploration phase when Shell decided to abandon it in April. The fine corresponds to the Initial Compliance Guarantee and is for non-compliance with the Work Unit requirements established in the Minimum Work Program.

CNH Approves PEMEX’s US$332 Million Production Plan for Camatl

CNH approved PEMEX's production plan for the Camatl field, located off the coasts of Veracruz and Tabasco. The plan involves an investment of US$332 million, with PEMEX's subsidiary PEP investing US$275 million in drilling infrastructure. Peak daily extraction is expected to reach 14.4 Mb and 6.9MMcf.

PEMEX's Crude Distillation Unit (CDU) at Deer Park Shuts Down

PEMEX's Deer Park refinery in Texas shut down its largest crude distillation unit (CDU) complex, known as DU-2, with a processing capacity of 270Mb/d, due to a reported failure. This marks the second shutdown at Deer Park after an earlier malfunction forced a fluid catalytic cracker offline. PEMEX's acquisition of the Deer Park refinery is part of an effort to boost Mexico's self-sufficiency in gasoline production. Initiatives are underway to establish logistical routes for improved capacity to meet national demand.

Significant Reduction in 3C Contingent Resources for 2023

Mexico's contingent resources, known as 3C, decreased by 27.6% from 8.7Bboe in the previous year to 6.3Bboe in September 2023. This reduction resulted from the reclassification of some of these resources as 3P reserves in 22 fields. Contingent resources represent potentially recoverable hydrocarbons from discovered accumulations not yet considered commercially viable due to contingencies. The report also indicates that most of these resources are in PEMEX's assignments (61%), while 35% are in private contracts, and 4% remain unassigned.

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