PEMEX's Execution CapabilitiesWed, 01/25/2012 - 11:01
On paper, Pemex’s operational performance is ranked high on a production cost per barrel basis in comparison to other NOCs and IOCs (see boxes below). Pemex’s figures from 2010 show that the company has managed to keep its production costs below those of Total, second on the rankings, since 2006. However, it is worth noting the reasons for such low production costs. For many years, a large percentage of Pemex’s crude output has come from the Cantarell field, where Pemex has not had to invest significantly in development in order to produce vast quantities of oil. The exploitation of this shallow water field was a process started by Pemex following Cantarell’s discovery in 1976, it is therefore reasonable to expect that by 2011 Pemex would have found the time to perfect this process and drive costs as low as possible and write o a substantial part of infrastructure investment.
One interesting name on the list of oil companies is Petrobras, a national oil company that for some years now has been focused on developing Brazil’s deepwater assets. Their production cost per barrel is higher than almost all of the supermajors, because Petrobras has had to invest in technologies and partnerships in order to develop and put into production Brazil’s deepwater reserves. Many of the other names on the list are companies that have deepwater activities. Once Pemex makes the jump to deepwater, it will almost definitely lose its place at the top of the list of most cost-ecient producers. The challenge will be to maintain costs in line with other national oil companies, and it will only be able to do this by using the right contracting models with international oil companies, a well-planned and wellnegotiated adoption of new technologies where needed, and in-house development of techniques where possible.
Industry Perspective: Juan Carlos Zepeda Molina, CNH “Pemex’s main challenge is a challenge of management rather than of technology or human resources. The current objective of the company and the resulting decision making process revolves around maximising production in the short-term. The CNH needs to make sure that in future, Mexico’s oil and gas fields are exploited in the long-term best interests of Mexico.”