The stranglehold that COVID-19 has had on Mexico for the past five months appears to be loosening, though time will tell if the country is able to withhold the outbreaks experienced by other nations.
The downstream is enjoying the relaxation of regulation and has seen fuel demand pick up dramatically. This is down to mobility restrictions being lifted and many returning to work while avoiding public transport. At the other end of the value chain, the world’s largest drilling company has just entered bankruptcy while PEMEX plans for more exploration, this time in deep water.
Catch up with the major industry news stories with The Week in Oil and Gas.
Gasoline Demand Roars Back
Gas demand has increased to near pre-pandemic levels as mobility restrictions have loosened in many regions of the country.
According to El Financiero, SENER data shows that 678Mb/d of fuel was sold during the last week of July, just 3 percent below the sales of the last week of March, prior to the national shutdown.
COVID-19 forced governments across the planet to enact measures to restrict mobility. As a consequence, fuel sales dropped by up to 70 percent in certain areas of Mexico. Among the heaviest-hit retailers was PEMEX, which reported a 51.8 percent fall in sales in 2Q20.
Valaris Files for Bankruptcy
Houston-based drilling company Valaris has announced it is filing for Chapter 11 bankruptcy in the wake of the oil price crash and demand destruction delivered by COVID-19. The decision comes following a disastrous first quarter where Valaris posted “a net loss attributable to the Company of US$3.01 billion” and a poor 4Q19 that resulted in a US$216 million net loss.
A press release issued by the company said that “Valaris will undergo a financial restructuring that is intended to reduce its debt load substantially, support continued operations during the current lower demand environment and provide a robust financial platform to take advantage of market recovery over the long term.”
The restructuring will help the company reduce its debt by US$6.5 billion and will mean that “upon consummation of the contemplated restructuring transactions, Valaris will have one of the best balance sheets in the offshore drilling industry,” the release read.
“The substantial downturn in the energy sector, exacerbated by the COVID-19 pandemic, requires that we take this step to create a stronger company able to adapt to the prolonged contraction in the industry, and to continue to enhance our position as overall market conditions improve,” said Tom Burke, President and CEO.
The bankruptcy of Valaris, the world’s largest drilling company, adds another major oil and gas player to the list of COVID-19’s victims, which now include fellow drillers Diamond Offshore, EPC company McDermott and operator Fieldwood Energy.
PEMEX Has Deepwater Exploration Plans Approved
CNH has approved three deepwater exploration plans for national oil company PEMEX on the AE-0172-Holok; AE-0173-Holok y AE-0174-Holok assignations off the coast of Veracruz.According to the plans, the minimum investment for explorations across the fields will be just over US$26 million though if each plan proves successful, investment figures could rise to just over US$138 million.
The news comes just a week after CNH announced that PEMEX will invest up to US$6.991 billion on the exploration of 46 assigned areas between 2020 and 2023. This investment includes plans to drill at least 192 wells during a first phase, which could rise to 325 if all the wells are successful.