Mexico’s Pemex Boasts 6 New Offshore Oil Discoveries

Mexico's state-owned oil and gas company Pemex announced the discovery of six new oil deposits in the Gulf of Mexico, four of them in shallow waters, and two in deep water. The company will start drilling exploratory wells at the sites of the discoveries next year, aiming for a total of 30.

A company spokesperson said the discoveries were made a few months ago, but were only announced after the reserves were estimated and the commercial viability of the discoveries was confirmed. The combined reserves of the two deepwater discoveries have been estimated at 140-160 million barrels of oil equivalent (proven, probable, and possible, or 3P).

The 3P reserves at one of the shallow-water discoveries were estimated at 50-60 million barrels. According to the company, the two wells drilled at the deepwater fields could deliver 15,000 bpd when production starts.

Pemex has been in urgent need of some good news in the discovery department for a while now, with its production in decline for over ten years, expecting in 2017 to hit the lowest level since 1980, at 1.9 million barrels per day. The decline has been the result of spending cuts prompted by the oil price slump that started in 2014.

Mexico's government has also been making spending cuts, and Pemex has been hit with a US$5.4-billion reduction in funding from the federal government for 2017, representing an 18-percent cut from what the company had originally hoped to get from the authorities. This came in addition to a US$5.5-billion budget cut made by Pemex earlier this year, including a suspension of deepwater projects in the Gulf of Mexico.

In addition to a lower federal government funding contribution, Pemex has been plagued by growing competition, with Mexico initiating a reform back in 2013 aimed at breaking the monopoly of the state-owned company on the local market.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:

• Are Hedge Funds Positioning For An OPEC Disappointment?
• Big Break Through For Small Scale LNG
• Is This A Sign That Oil Majors Are Becoming More Bullish