Despite what looks like bullish…
The key reason why OPEC+…
There will be no new exploration and production contracts on the table for private or foreign companies in Mexico under a government plan set to be made public soon.
“We don’t expect that there will be anything new in exploration and extraction in this infrastructure plan,” the head of Mexico’s oil industry association AMEXHI told Reuters in an interview.
The infrastructure plan is the Mexican government’s attempt to stimulate economic growth, but according to AMEXHI’s head, Merlin Cochran, it will not involve a focus on the energy industry in the form of new projects. New joint ventures for Pemex are also unlikely, Cochran told Reuters.
Earlier this week, it emerged that Mexico might have to cut its production target for 2021 as total output continued to fall steadily. President Andres Manuel Lopez Obrador has ambitious plans for reversing this fall, but this plan relies exclusively on state player Pemex, and the company has probably the highest debt pile in the oil industry, despite government efforts to help it prop up its finances. This has made the target of 2 million bpd even harder to achieve.
According to government plans, Pemex was supposed to boost oil production by about half a million barrels in 2021. Instead, in July production fell to 1.54 million bpd because of a sharp drop in the output from Pemex’s largest offshore field, Maloob. Output from Maloob fell by more than 30 percent on the year. This meant Pemex’s total for July fell to a record low.
Earlier this year, there were media reports that the Mexican state company would farm out some production to foreign companies. The head of the National Hydrocarbons Commission, the state industry regulator, said he expected farm-out deals to be announced soon. However, this has not happened to date even though, according to NHC’s Rogelio Hernandez, Pemex was actively looking for partners.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.