PEMEX Updates Production Forecast for 2020 and 2024

PEMEX said yesterday that it would hit 2.296MMb/d by the end of the López Obrador administration and that it would finish 2020 at 1.94MMb/d.

The new figures were presented during a congressional committee by PEMEX Director Octavio Romero, reports Reuters. Though the 2024 output prediction is just below PEMEX’s now abandoned 2.4MMb/d goal that the president and the NOC offered as recently as the beginning of this year, it would still be an impressive turnaround for a company that was struggling to hit 1.7MMb/d before President Lopéz Obrador arrived to office in December2018.

The short-term target of 1.94MMb/d by the end of this year would also be a big win for PEMEX, which due to the pandemic, as well as severely delayed development plans on its priority fields, has seen its production decrease from 1.724MMb/d in January 2020 to 1.633MMb/d as of August, the latest available information.

Following the oil demand collapse in April, OPEC+ agreed to reduce global production by 9.6MMb/d to be divided between member nations and other cooperating nations including Mexico. The country reduced its production by 100Mb/d between May and June. Production is now slowly climbing again.

Director Octavio Romero said yesterday that new developments would be a large contributor to PEMEX’s higher production. If this is to happen, PEMEX will have to make significant improvements on its priority field developments, which, in May this year, had missed their production target by 75 percent. Between January and March, PEMEX had drilled only five of the 15 wells it had intended using just 44 percent of its MX$11.82 billion (US$530 million) budget.

Romero also noted he expects private companies to offer only fraction productive figures to the nation oil production figures, but, as Reuters pointed out, he did not mention that many are only in early phases of exploration. This oblique suggestion is in line with the administration’s earlier criticisms against private companies, which publicly decried a lack of private production despite knowing that oil and gas developments take several years just to reach first oil.

Earlier this year, Mexico Business News spoke with Merlin Cochran, Director General of AMEXHI, the upstream association of which PEMEX is a member, who explained that private production would increase this year despite the COVID-19 delays.

“The companies with the highest likelihood of starting production this year are Fieldwood and Petrobal on Ichakil and Pokoch fields and Hokchi Energy on Hokchi field. According to the approved development plan of Ichalkil and Pokoch, which by its very nature must make certain assumptions, the fields could be producing 25Mb/d by the end of this year. Similarly, Eni’s Amoca-Miztón-Tecoalli area is producing close to 12Mb/d, while Eni believes it could reach another 10Mb/d. Hokchi is likely to be producing a further 15Mb/d to add to overall production figures this year,” he said.

Cochran also pointed out that the value of private involvement should not be judged by production figures alone. “The truth is simply that the one single metric of production does not adequately illustrate the reality of progress that private companies are making,” he said. “As companies progress through their contracts, new commitments will come. But so far, approved investment is close to US$39 billion, stretching from the Energy Reform into the foreseeable future. Companies have already invested US$11 billion according to figures published early this year by CNH. In 2020, companies are set to invest more than they have in all previous years put together."

Read the full interview with Merlin Cochran here.