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Mexico’s Pemex reported its oil production grew last year, for the first time in fifteen years. However, there’s a big catch—the increase was only a result of how the company is counting barrels, Bloomberg reports.
And anyone trying to compare production figures from year to year will run into a problem of comparing apples to oranges.
The change in calculations is pretty straightforward; Pemex simply started adding gas condensate output to the total crude oil production it counts.
Without condensates, Pemex and its partners produced 1.66 million bpd of oil last year, down 1 percent on 2019.
With condensates, oil production was 0.23 percent higher last year.
The boost was made possible by new condensate discoveries that added 46,000 barrels daily to Pemex’s condensate production: a twofold increase. A positive as this is, it is questionable whether the condensate production increase should actually count towards the company’s total oil production, which it has been struggling to boost after a persistent decline.
The Andres Manuel Lopez Obrador government has prioritized Pemex and has provided the company with massive tax relief and other help to restore its control of the Mexican energy market, but the expected results from all this support have been slow in coming.
Pemex is the most heavily indebted oil company in the world, with a burden of about $100 billion. This and the lack of foreign partners because of the government’s policies has hampered Pemex’s efforts to boost oil production. In fact, it has had to revise down its forecast output rates for this year, from 2.027 million bpd to 1.857 million bpd as the higher target proved unattainable.
In its efforts to help, the government last year reduced Pemex’s shared utility tax rate from 65 percent to 58 percent. This year, it could be cut further to 54 percent. It is doubtful if that generous support will help, however, as exports of crude and as a result revenues, continue to decline, limiting the company’s financial ability to invest in production growth.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.