Mexico’s boost in oil output to be used for global demand

Jan 17, 2003 01:00 AM

The threat of war with Iraq and the Venezuelan strike may be limiting the supply of oil in the United States, but don't count on Mexico to fill much of the void. Mexico plans to increase daily crude production by only 100,000 bpd, bringing output to 3.5 mm barrels, Petroleos Mexicanos officials said.
And that increase will go to global demand instead of the United States. The state oil monopoly will produce close to its total capacity by next month, said Luis Ramirez, Pemex's general director of exploration and production. Very few oil producing nations, except possibly Saudi Arabia, can ramp up production quickly enough to respond to a "temporary event" like the crisis in Venezuela, said Pemex's director, Raul Munoz.

Mexico sends about 80 % of its oil exports to the United States, and that percentage should not change much, Munoz said. In addition to boosting crude production, Pemex plans to increase natural gas production by allowing foreign companies to explore and develop natural gas reserves in northern Mexico's Burgos Basin. As a state-owned monopoly, Pemex's earnings go to the government instead of being reinvested in the company. So Pemex does not have the money or equipment to invest in exploring the Burgos Basin, Munoz said.
Through a plan known as multiple service contracts, foreigners would be paid based on production volumes and at the price of natural gas on the day of production. What makes these contracts significant for the oil industry is that it is the first time in more than two decades that Pemex plans to pay contractors based on performance, said George Baker of the Houston-based consulting group Mexico Energy Intelligence.

For more than a year now, Pemex officials have touted these contracts as a way of producing an additional 1 bn cfpd, to nearly 7 bn cfpd within the next three years. Munoz said he's optimistic that in five to six years, Pemex will be self-sufficient in natural gas production and will even be able to export. For now, Mexico is deficient in natural gas and imports some of what it consumes.
Despite the need for more natural gas, Pemex officials have faced plenty of political obstacles with these contracts, as many Mexicans feel that all things oil and gas are part of their nation's patrimony and they don't want foreigners profiting from their natural resources.

That opposition has helped push back last November's deadline for taking bids for multiple service contracts. Munoz said he expected Pemex to begin seeking bids by the end of February, and by September it should begin signing contracts with companies.
And to increase domestic petrochemical production, which has been declining, Pemex also plans to invite consortia of private companies to invest about $ 2 bn in constructing a petrochemical complex in either of the eastern coastal cities of Altamira or Coatzacoalcos.

Alexander's Commentary

Change of face - change of phase

In the period of July 20 till August 3, 2015, Alexander will be out of the office and the site will not or only irreg

read more ...
« October 2019 »
1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31

Register to announce Your Event

View All Events