PEMEX Fails to Reach Production and Refining Targets in 2022
Annual oil production registered its lowest level in the past 43 years. In 1979, Mexico registered a 1.461MMb/d production, while 2022’s annual production stood at 1.622MMb/d. Similarly, private players reported production of approximately half of their combined original production target, lingering at 102,750b/d. The NOC furthermore did not manage to hit its refining targets.
PEMEX is responsible for about 94 percent of oil production in Mexico but saw a significant year-over-year decline in the barrels it produced. Analysts attribute this to the decline of one of PEMEX’s main production assets, Ku-Maloob-Zaap.
Fifty-two percent of the NOC’s production comes from the Maloob, Zaap, Quesqui, Ayatsil, Xanab, Balam, Tupilco Profundo and Yaxche fields. Some of PEMEX’s key production fields that declined the most are Xanab and Esah, which reported higher water retrieval than oil production in 2022. The risk of this happening at times leads assets to close down sooner. PEMEX was fined by CNH in 2018 due to a breach in the field’s development plan, accelerating the production of water and dropping oil production.
Furthermore, according to Bloomberg, PEMEX reported its production figures including natural gas condensates to investors in order to show production numbers. This is not a common practice in the hydrocarbons sector as stipulated by the Petroleum Resources Management System. Using this metric, PEMEX reported a 1.84MM/d, closer to the original 2MMb/d target set by the López Obrador administration.
Moreover, Mexico’s private production did not reach its production target for the fourth year in a row. The IOCs set out to produce 209Mb/d for 2022 but reported a 102.75Mb/d production, 49.2% below the government’s goal. The companies that reported the lowest levels of production were Eni and Fieldwood Energy, while Hokchi reached its highest production level. Together, the companies account for 80% of private production.
Amid low oil production, PEMEX also failed to hit its refining targets. Although refining increased in 2022, its average of 814,524/d for the first 11 months has remained 32% below the target. What is more, fuel oil production has increased. Similarly, the use of the installed refining capacity is at one of its lowest points since 2012. While the SNR produced fuels at 77.7% capacity in 2012, it was producing at 49.7% of its capacity in November 2022.
During the first three years of the administration, the government invested MX$33.5 billion (US$1782 billion) toward the rehabilitation of the SNR. One of López Obrador's promises on refining goals was for the National Refining System (SNR) to produce at 85% of its capacity by 2021. However, this objective is out of reach in the short term.