PEMEX Likely to Fall Short on Production Despite GoM Resurgence
According to the data provided by the national upstream regulator CNH, PEMEX has failed to reach the production goals that it had set in its Business Plan in 2019. Some experts say that initial expectations were unrealistic from the start, while others point out that there is still potential in offshore areas in the Gulf of Mexico (GoM), although the US side of the gulf appears to be performing better.
Of the initial oil production goal of 2.3MMb/d that PEMEX was supposed to reach by March 2022, the company stood below at 1.6MMb/d. Carlos Ramírez, Economic and Political Consultant, Integralia, said that PEMEX’s inability to reach the target had its roots in a failing strategy followed by the state-owned company.
Furthermore, Ramírez listed four main reasons why PEMEX had not been able to reach its goals. Firstly, the plan that was outlined in 2019 was not grounded in reality. Furthermore, the government famously suspended oil rounds and farmouts in order to keep the private initiative from interfering in the oil and gas industry. Additionally, PEMEX has abandoned most of its efforts in deep and shallow water exploration to concentrate its efforts on exploring 20 oil fields, which has not proven to be a successful strategy so far.
Lastly, the oil field Ku-Maloob-Zaap, Mexico’s current main oil production field, is reportedly not as productive as it used to be in 2018 and 2019. Ramírez described this downturn as a natural stage for all wells. Nevertheless, because the production goals never really seemed to be completely realistic, the strategy to exploit 20 fields now is practically unfeasible.
Conversely, other experts maintain a more positive outlook. For example, Alberto de la Fuente, Managing Director, Shell, said that emerging projects could spark a new surge in production, such as the PEMEX-operated Zama offshore field. “There are enormous projects and investments in the making. [We] hope that there would be more rounds and that process would start sooner to avoid the risk factor,” de la Fuente commented during the 2022 National Oil Conference.
The Gulf of Mexico on the US side will likely undergo important developmental changes too, especially regarding developing clean energy production. Managers from Oil and gas supermajor BP have announced that the company expects to double the crude oil production, while also reducing the number of gas emissions and the overall costs.
Other major companies like Shell, have been allegedly putting money towards financing clean energy initiatives in the Gulf, while Exxon Mobile has partnered with some others to launch an initiative to capture carbon emissions from refineries, chemical industrialists and other industries and store them under seabeds along the Gulf Coast.
Starlee Sykes, BP’s Senior Vice President Gulf of Mexico and Canada, further emphasized the importance of the Gulf of Mexico in energy transition strategies in light of lower production and possibly crude oil shortages, “Our assets in the GoM are continuing to meet resilient oil and gas demand, enhancing global security and setting an example for how to do this responsibly, safely and with lower carbon intensity,” Sykes asserted during her presentation at the Offshore Technology Conference on May 2.