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Will Low Prices Save Long-Term Oil Demand?

Will Low Prices Save Long-Term Oil Demand?

Will low gasoline prices will…

Mexico Eyes Higher Oil Output Than Venezuela, Brazil

Mexico plans to increase its crude oil production substantially, overtaking both Venezuela and Brazil if its plans work out. This has emerged after earlier this week, the country awarded nine major drilling contracts to international bidders for fields in the Gulf of Mexico.

Venezuela currently produces around 2 million bpd, which could drop to 1.6 million bpd next year. Brazil pumped 2.6 million bpd in October. When commercial production starts at the nine new fields, Mexico’s National Hydrocarbons Commission expects the combined output from them to reach 900,000 bpd, adding to the country’s current rate of some 2 million bpd.

One of the fields that will be developed in the deepwater section of the Mexican shelf, part of the Trion block, was awarded to Australia’s BHP Billiton, one of the world’s top three miners, which has been expanding its oil and gas operations recently. This, as the Wall Street Journal reports, made it the first foreign company to join Pemex in the development of an already operating oilfield.

Chevron, BP, Exxon, and the China National Offshore Oil Corp. were also among the winners in the tender. CNOOC won the rights to drill at three fields; Statoil, BP, and Total together will develop another two blocks; and the rest will be developed by POC Carigali, a unit of Malaysia’s Petronas, in partnership with Mexico’s first private oil and gas company, Sierra, along with U.S. Murphy Oil and UK-based Ophir Energy.

Related: Kuwait Calls For Meeting To Enforce OPEC Cut In Q1 2017

Two blocks remained unawarded, but nevertheless, the results of the tender were considered a bigger success than initially expected by the organizers. Investments in the blocks could reach US$40 billion.

The tender also marks a milestone in Mexico’s liberalization of the energy sector, which began in 2013 with the aim of making better use of the country’s mineral resources by removing Pemex from its monopoly position and inviting outside investments in the industry.

Mexico is currently the fourth-largest oil producer in the Americas, according to the EIA, behind the US, Canada, and Brazil.

By Irina Slav for Oilprice.com

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  • gulagPittsburgh on December 08 2016 said:
    There goes the Venezuelan plan to increase oil prices by the recent deal of OPEC and Russia to cut back production. Mexico is increasing production by breaking out of old policy of doing it all in-house. Now will be bringing in international oil firms.

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