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The Mexican government is ready to review offers for so-called farm-outs with Pemex if the projects proposed are feasible, Reuters has reported, quoting Energy Minister Rocio Nahle.
This is a marked departure of Nahle’s previous skepticism about the benefits of Pemex working with foreign oil companies. In fact, just last month the Mexican government said it was working on a new infrastructure plan that, according to reports, would not include any new contract possibilities for oil and gas exploration and production.
This has not helped troubled Pemex, which is the most indebted oil company in the world at the moment, improve its situation. Earlier media reports citing government officials said Pemex was actively looking for farm-out partners to boost its production and revenues but Minister Nahle personally oversaw the suspension of such contracts as part of the Lopez Obrador government’s push to make Pemex stronger on its own two feet.
As a result of this push, the company will likely have to revise down its crude oil production targets. Its oil output was supposed to increase both this year and next but this year it has continued its stable decline from years ago and there is little Pemex could do to reverse this fall. In July, the company’s daily average hit a record low because of sharp slumps in output from two fields.
For this year, Pemex was supposed to produce an average of 1.83 million bpd. However, it has little chance of hitting this target, which would make it harder for the company to pursue the more than 2 million bpd target set for 2021, especially with global demand still in the doldrums.
Nahle said the decision whether to seek help from foreign partners was to be made by Pemex, which is effectively a green light for such pursuits, understandable in light of Pemex’s debt pile and its progress with production growth plans.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com