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Tue. Apr 23rd, 2024

Early Last year, Crude Oil Production in Mexico is expected to fall below 2.13 Million Bpd in 2017, and possibly pick up in 2018.
Mexican Crude Oil Production could dive below 2.13 million barrels per day in 2017, according to Jose Antonio Gonzalez Anaya, CEO of state-owned Petroleos Mexicanos (Pemex).

In April 2016, Pemex’s oil output was estimated to 2.18 million bpd, which is below the target of 2.25 million bpd by the end of the year. A decline to 2.13 million bpd in Mexican crude oil production is expected in 2017, but Pemex also sees output stabilizing in 2018.

Moreover, Mexico is among the biggest crude oil producers in the world, standing at ninth place. The latest problems faced have caused the country’s production to shrink, although 12 years ago it stood at a standard record of 3.38 million barrels per day. In April last year, the Mexican government decided to support Pemex with 73.5 billion pesos (about $4.2 billion) over 2016. Direct financial support to the company will amount to $1.5 billion. The funds contributed will support the company’s financial standing amid the global downfall of oil prices. Pemex, at the same time, will lower its budget by $5.5 billion.

Recently, the problem of low oil production is becoming a thing of the past as an Italian oil company Eni discovered “meaningful” reserves of oil off the coast of Mexico after drilling the first well by an international oil company since Mexico opened up its sector to private investment in 2013.

Eni over the years has won the block in the shallow waters of the Bay of Campeche in south-east Mexico. It knew oil was there because Pemex, Mexico’s national oil company, had already explored the area. However, the significance of Eni’s announcement is that it points to the presence of oil at deeper levels, in previously unknown areas of the block.

Furthermore, Chief executive Claudio Descalzi said “the discovery is very promising” and that the company was working on a probable bid in the next Mexican auction round, for offshore areas, in June. “Clearly we are putting a strong focus on Mexico,” he said.

“The discovery is 7-8km from the shore and 20-30km from Pemex [infrastructure] facilities so if we need to accelerate [development], I think it can be done very quickly,” Mr Descalzi said. He further said that they need to move fast so that their production level could hit high in three years time.

“This shows us the tangible results of the energy reform. It shows you can deliver reserves from unexpected horizons,” said Pablo Medina at oil consultancy Wood Mackenzie.

He further explained that while Pemex focused on easier-to-develop shallow water offshore areas, people with global experience look through a different angle and can find upside in places that are not the easiest to access”

In addition, Juan Carlos Zepeda, head of the National Hydrocarbons Commission, said the new discovery was a “reservoir of 65m of thickness of net oil” — a size analysts say it is important.

“I think it’s a very good news. We’ve now got a couple of companies drilling and Eni is a major — this carries more weight. It’s a benchmark,” said John Padilla, managing director of IPD Latin America, a consultancy.

Oil is very important for the number of jobs it provides.It is the back bone of about 98% of every country’s daily activities. As a matter of fact, the discovery of oil in Mexico will boost the country’s economy and production market.

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