Prices, PEMEX and Operator Progress

Out with the old and in with the new. The arrival of US President Joe Biden brought positivity to markets, while Fitch cast doubts on PEMEX and operators offered a few short updates on their activities. RelyOn Nutec also told MBN about the new ways for working onboard an offshore platform.

All this and more in the Week in Oil and Gas.

Biden’s Inauguration Keeps Oil Rising

Oil prices rose the day prior to the inauguration of newly elected US President Joe Biden and kept raising on Wednesday. The markets reacted positively to the president’s proposed US$1.9 trillion economic stimulus and stronger efforts to combat COVID-19 in the world’s major economy.

Prices climbed despite the IEA trimming 300Mb/d from its 2021 oil demand forecast. “For now, a resurgence in COVID-19 cases is slowing the rebound, but a widespread vaccination effort and an acceleration in economic activity is expected to spur stronger growth in the second half of the year,” reported the agency.

In other positive news, China’s refinery output rose 3 percent in 2020 and kept the Mexican crude basket above the US$50 per barrel mark.

RelyOn Nutec Discusses Offshore Safety

Mark Denkowski, Drilling Services Manager for the Gulf of Mexico at safety training and equipment services provider RelyOn Nutec, told MBN about the company’s enhanced methods for safety on drilling platforms in light of the pandemic.

Denkowski explained that working procedures have been adapted to cope with the prevalence of the virus and its high contagiousness. “The size of crews has not been reduced because of regulations that call for a minimum number of personnel onboard. Nevertheless, shifts have sometimes gotten longer, especially due to the accommodations that have had to be made regarding quarantine times and travel restrictions,” he explained.

PEMEX a Risk to Public Finances Says Fitch

Credit rating agency Fitch has followed in the footsteps of Moody’s to declare PEMEX a risk to the public finances of Mexico due to the rapidly dwindling contribution of the NOC to the nation’s purse and the heavy losses it sustained last year.

PEMEX’s losses, including the historic US$23 billion during 1Q20, further weakened the fiscal health of the most indebted oil company on the planet. Fitch’s Sovereign Analyst for Mexico Charles Seville said that “it is probable PEMEX will need more support (from the government). This will not signal an important change for the sovereign rating but will continue to be a considerable potential risk for public finances,” El Economista reports.

Operators Offer Progress Updates

The PEMEX-BHP Billiton farmout on the Trion field is making progress, according to the Australian multinational’s latest operational review for 2H20. “In Mexico, we commenced an Ocean Bottom Node seismic acquisition over the Trion field on Nov. 9, 2020, as part of our ongoing evaluation and analysis. The survey was 95 percent complete as of Dec. 31, 2020 and will be completed in the March 2021 quarter. The results will be incorporated into the current evaluation of the Trion opportunity,” the report notes.

The Trion field was won by the PEMEX-BHP Billiton partnership in December 2016, with the private company owning a 60 percent interest. Recoverable estimates of the deepwater location were 485MMboe when the contract was signed.

Meanwhile, Cairn Energy offered guidance for 2021, noting that it would spend approximately US$75 million on exploration and appraisal on its UK and Mexico interests. In addition, it has a 15 percent working interest on Block 10, where operator Eni will drill one exploration well, while “there is another optional drilling opportunity for an appraisal well of the Saasken discovery.”