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Mexico will keep its 2017 production target at 1.944 million barrels per day, as set out in state oil company Pemex’s plans, and lower than the expected 2.159 million bpd output for the end of this year, the country’s energy department said on Wednesday.
This reduction would help stabilize the crude oil market and is mostly the result of the natural decline of Mexico’s oil fields, which started in 2004, the department said.
Mexico, which is not a member of OPEC, believes that the cartel’s decision to cut production by 1.2 million bpd as of January would help to stabilize oil prices, which in turn could favor new investments in exploration and production, the energy department noted. The country also believes that the deal would boost global energy security.
Pemex’s business plan 2017-2021 that was unveiled last month includes conservative underlying assumptions for production of 1.944 million barrels per day, and a conservative oil price projection of US$42 per barrel.
Now it looks like the energy department will keep the 1.944 million bpd target, rather than the expected year-end production for 2016, in a sort of ‘contribution’ to the OPEC-non-OPEC production cuts.
On Wednesday, just before OPEC said it agreed to cut, Mexican finance minister Jose Antonio Meade had said that any OPEC cut would be positive for Mexico and its oil company Pemex.
“It was becoming clear that there could be an accord, I’m not sure that it was reached, I don’t know the details, but if it is the case then it’s good news,” Meade said in Mexico City, as quoted by Reuters.
This past September, minister Meade said that around US$5.4 billion in funds for Pemex would be eliminated from the proposed federal budget in 2017.
“Pemex is making the biggest contribution to the cuts,” Meade said about the company that will see an 18 percent reduction in funds and will make up some 41 percent of the US$12.83 billion slashed from the budget.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.