PEMEX Sets Upstream Capex Budget Increase for 2023
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PEMEX Sets Upstream Capex Budget Increase for 2023

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Karin Dilge By Karin Dilge | Journalist and Industry Analyst - Wed, 05/24/2023 - 06:03

PEMEX has announced a significant increase in its upstream CAPEX budget for 2023. The budget has been set at MX$240 billion (US$13.4 billion), up from MX$162 billion (US$9.05 billion) in 2022. These investment plans were disclosed in PEMEX's latest annual report, which was submitted to the US Securities and Exchange Commission in late April.

A major portion of the budget, amounting to MX$44.4 billion (US$2.48 billion), has been allocated to the offshore Ku-Maloob-Zaap complex. This represents nearly double the amount budgeted for the complex in the previous year. As of March, Maloob and Zaap were the top two producing oil fields in Mexico. According to the National Hydrocarbons Commission (CNH), they ranked fourth, fifth and seventh for natural gas output.

The second-highest allocation in the upstream capital budget for 2023 is for the onshore Ixachi natural gas and condensate field. This field has been crucial in maintaining Mexico's gas and liquids production despite PEMEX's mature fields declines. The NOC has assigned a CAPEX budget of MX$19 billion (US$$1.06 billion) to Ixachi, a significant increase from the MX$5 billion (US$287 million) allocated in the previous year. In March, Ixachi stood as PEMEX's second-leading natural gas producing field, while the top spot was held by the onshore Quesqui field.

PEMEX aims to produce 4.67Bcf/d of gas in 2023, as outlined in its 2023-2027 business plan. This target largely depends on the contributions from Ixachi and Quesqui. However, the first-quarter output fell short of this goal, averaging 4.1Bcf/d. 

In addition, the budget for the development of Quesqui in 2023 is MX$11.5 billion (US$643 million), a decrease from the MX$12.9 billion (US$722 million) allocated in the previous year. Other prominent projects in this year's CAPEX budget include the offshore Ek and Balam fields, collectively referred to as Ek-Balam. Additionally, the state-owned company plans to nearly double its investment at Ek-Balam to MX$14 billion (US$784 million) this year. Furthermore, for the joint development of the Lakach deepwater gas field with LNG exporter New Fortress Energy Inc, PEMEX has designated a capital expenditure of MX$689 million (US$38.6 million) for this year.

PEMEX reported a net profit of MX$56.7 billion (US$3.17 billion) for 1Q23, compared to a profit of MX$122.5 billion (US$6.85 billion) in the same period last year. Moreover, wellhead gas production reached 4.1Bcf/d, reflecting a 7.4% increase year-on-year. Dry gas output from PEMEX processing centers averaged 2.76Bcf/d, slightly lower than the 2.79Bcf/d from the previous year.

Of the total output, 54% was attributed to associated gas linked to oil production, while the remaining 46% came from non-associated gas. Meanwhile, onshore fields contributed 56% of the overall output, whereas offshore fields accounted for 44%.

The natural gas capture rate stood at 92.4%, indicating a high level of efficiency in capturing and utilizing gas resources. However, there were still volumes of gas flared, totaling 373MMcf/d, compared to 390MMcf/d in 1Q22. What is more, oil production during 1Q23 reached an average of 1.85MMb/d, reflecting a 5.9% increase compared to the same period in the previous year.

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