PEMEX Production Falls While Privates Set New Milestones

Among this week’s top stories, PEMEX saw crude production fall in the August report while private players achieved new production and investment records in the same month. Elsewhere, the price of gasoline is now cheaper on average in the US compared to Mexico. 

For all this and more, here is this week in oil and gas!

Mexico:

PEMEX’s Crude Production Falls in August

In August, PEMEX’s crude production decreased by 1 percent compared to the previous. During the first 8 months of 2022, it only increased 1.8 percent since the start of the year, as production remains below the government’s goals of 1.82MMb/d. Export levels, as well as production of PEMEX and its associates, decreased 1 percent during August in comparison to the previous month. According to NOC’s data, 1.779MMb/d were produced, a 3 percent increase compared to the same month in 2021.

Average Price of Fuel Cheaper in the US than in Mexico

The average price of regular gasoline in the US is now cheaper than its Mexican equivalent, starting the week at MX$20.02/l (US$0.99/l), 8.1 percent cheaper than Mexican gasoline which stood at MX$21.78/l (US$1.08/l). For months following the start of the Russia-Ukraine war, US citizens had been crossing the border to find cheaper gasoline in Mexico, a trend that is now likely to diminish.

Private Production, Investment up in August

Private oil companies operating oil fields in Mexico set another production record in August. Having surpassed 100Mb collectively for the time in May, production reached 106.115Mb/d in the month gone by. The companies propelling the production milestone have upped their month-over-month investment levels, too. The new milestone achieved by IOCs in Mexico was driven primarily by the performance of Eni and Hokchi’s shallow-water portfolios.

30Mb/d Production Capacity Added to Tupilco

PEMEX CEO Octavio Romero announced this week that PEMEX had added two wells, each with a 15Mb/d capacity, to the onshore Tupilco field in Tabasco. Tupilco, which boasts reserves of a light 40.18° API  crude, falls under Assignment AE-0140-2M-Comalcalco. It spans a total area of 1,319.57km² and is located 20km southwest of the Dos Bocas Maritime Terminal (TMDB) in Tabasco. The field entered the year with 22.55MMboe of 3P reserves and three further wells are expected to come online by the end of 2022 to improve the extraction rate.

PEMEX Upstream Production Report

While oil production seems to be slowly increasing after the drop-off seen during the pandemic, the goal of 2MMb/d production still seems far off as mature fields continue to decline. Moreover, experts point out that without more exploration activities, depleting reserves put the country’s production efforts at risk. PEMEX set production targets of 1.853MMb/d for crude oil and 5.120Bcf/d for natural gas in 2022. To meet these targets, the NOC has sought to focus on areas where it traditionally possesses greater experience and higher historical success rates, as well as those with the potential for near-term results. Onshore and shallow water projects, as well as secondary and tertiary recovery systems for older fields, have been prioritized at the expense of more expensive, long-term deepwater projects. 

International

Guyana to Launch First Competitive Bid Round

The Guyanese government is finalizing new fiscal terms and conditions as it prepares to launch the country’s first bidding round for offshore exploration blocks. The government is working to come up with a contractual model to allow it to gain the maximum economic benefits and advance upstream activities, while heading off a repeat of past criticism about “overly generous” terms for the international oil companies. As part of the process, the government seeks to obtain what it describes as a fairer share of revenues from oil and gas resources. Authorities are also touting a process that will ensure the safety and environmental standards, maintain a competitive position in the region and encourage investor confidence.

Shell, Exxon to Win New Roles in Qatar's LNG expansion 

Qatar will bring on board Shell and Exxon Mobil as partners in the second phase of the Gulf country’s large-scale liquefied natural gas (LNG) expansion, three sources familiar with the matter told Reuters. The North Field South (NFS) expansion is part of Qatar’s ambitious drive to consolidate its position as the world’s top LNG exporter, with demand for the fuel growing as Europe scrambles to substitute the Russian pipeline gas that made up almost 40 percent of the continent’s imports.

Nigerian Oil Export Terminal Had Theft Line Into Sea for 9 Years

Officials in Nigeria discovered an illegal connection line from one of its major oil export terminals into the sea that had been operating undetected for nine years, the head of state oil company NNPC LTD said. The 4-km connection from the Forcados export terminal, which typically exports around 250,000b/d of oil, was found during a clamp-down on theft in the past six weeks, NNPC Chief Executive Mele Kyari told a parliamentary committee.
 

OPEC+ Considers Large Production Cut, Sparking Pushback From US

 OPEC+ is considering its biggest production cut since 2020, a move the US is trying to head off with furious diplomatic efforts. The group is set to discuss a cut to its output limits of as much as 2 million barrels a day, using current targets as a starting point. While a significant reduction, the actual impact on global supply would be smaller because several countries are already pumping below their quotas.