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Pemex No Longer Interested In Deepwater Oil Projects

Pemex will avoid investing in deepwater offshore projects, instead focusing on areas where it has experience, including the shallow waters of the Gulf of Mexico and onshore fields, Reuters quoted a senior executive as saying.

The Mexican state energy company has been struggling to reverse a production decline that has been going on for more than a decade, but it is also struggling under a substantial debt load, and despite government efforts to prop up its finances, has obviously decided not to go into high-cost deepwater projects for the time being.

To date, Pemex produces about 1.7 million bpd of crude, most of it from onshore and shallow water fields. However, this figure is almost half of the 3.4 million bpd it pumped in 2004. It was this decline that pushed the previous government to launch an extensive overhaul of the energy industry of the country, inviting foreign oil companies to come and bid for new oil and gas projects.

The new administration of leftist President Andres Manuel Lopez Obrador, however, has suspended all oil and gas tenders while it reviews contracts signed by the Pena-Nieto government for signs of corruption. Despite this suspension, which effectively delays potential production gains, Obrador has pledged to enable an increase in oil production to 2.5 million bpd by the end of his term in 2024.

Pemex is already making steps to boost production despite its financial woes. The company in December said it will spend 14 percent more this year than in 2018, at US$23 billion, most of which will be poured into already producing fields as gains there come most quickly.

At the time, Pemex’s chief executive Octavio Romero noted that so far, deepwater exploration has not produced particularly impressive results. “At best we’d have the first drop of oil by 2025,” Romero said, after noting that the two previous governments had spent 41 percent of total Pemex investments in deepwater exploration.

By Irina Slav for Oilprice.com

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