• 4 mintues Texas forced to have rolling brown outs. Not from downed power line , but because the wind energy turbines are frozen.
  • 7 minutes Forecasts for oil stocks.
  • 9 minutes Biden's $2 trillion Plan for Insfrastructure and Jobs
  • 13 minutes European gas market to 2040 according to Platts Analitics
  • 3 hours Simple question: What is the expected impact in electricity Demand when EV deployment exceeds 10%
  • 6 hours America's pandemic dead deserve accountability after Birx disclosure
  • 2 days Putin blocks Ukraine access to Black Sea after Joe blinks
  • 19 mins U.S. Presidential Elections Status - Electoral Votes
  • 3 days Today Biden calls for Summit with Putin. Will Joe apologize to Putin for calling him a "Killer" ?
  • 1 day Fukushima
  • 2 days So. Who's for Universal Basic Income?
  • 3 days Biden about to face first real test. Russia building up military on Ukraine border.

Pemex Prepares For 2021 Oil Pirce Hedge

Mexico’s state oil company Pemex is preparing to launch its 2021 oil hedge that will protect its revenues, Reuters reports, citing an unnamed company source, who also said the company had been waiting for oil prices to recover before it begins hedging future production.

According to the report, Pemex made $377.3 million from its 2020 hedge and $369 million from the 2019 hedge. The program for the 2021 hedge has already been approved by the company’s board of directors, the Reuters source said.

The Pemex oil hedge is much smaller than the oil hedge of the Mexican government—perhaps the most notorious hedge deal in the world, in which Mexico buys options on oil from banks and oil supermajors based on a projected average price. For this year, the projected price was $49 a barrel. To compare, the Mexican oil export basket this year has averaged just $34.22 a barrel.

Pemex has become the most indebted oil company in the world despite efforts from the Andres Manuel Lopez Obrador government to support it with tax relief and other means. The company has been struggling with falling production and few options for help as the government suspended all contracts with foreign oil companies as well as tenders for new exploration blocks.

Related: Why The Vaccine Oil Rally Won't Last

The government recently had to revise down Pemex’s 2021 production target because of these factors and now expects it to produce 1.875 million bpd next year, down from an earlier projection of 2.027 million bpd.

This year Pemex is likely to fall short of its production target, too, for the same reasons in addition to natural field depletion that has been plaguing the company for years, ever since it reached a peak of 3.4 million bpd in 2004. Earlier this year, Pemex cut production by about 100,000 between May and July to support OPEC+ efforts to control oil supply. Since then, however, output has failed to recover. The latest monthly data shows a daily average of just 1.627 million bpd.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com

Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News