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Pemex production falls for the fourth consecutive month

2020-08-25T20:55:11.492Z


The Mexican state company reported 1.5 million barrels a day in July, 4.5% less compared to the same month of the previous year


A Pemex worker during a protest in Cadereyta, Monterrey, on August 6 DANIEL BECERRIL / Reuters

The goal that Andrés Manuel López Obrado set for Petróleos Mexicanos (Pemex) at the beginning of his six-year term - to produce 2.4 million barrels per day by 2024 - is not only far off, but the company seems to be moving in the opposite direction to that goal . In July, the pumping has contracted for the fourth consecutive month, as reported by Pemex this Monday. The company has reported that the production of liquid hydrocarbons was 1.5 million barrels per day in July, that is, 4.55% less compared to the same month of the previous year and below the 1.6 million barrels per day. average with which it closed 2019. The company has suffered a drop in its production for more than a decade and has become the most indebted oil company in the world.

In the first seven months of the year, the state oil company has pumped 11.7 million barrels a day, according to the company's figures, that is, 0.3% more than in the same period of 2019. The one reported this Monday, however, it has been the company's worst result so far this year and the fourth in a row in which Pemex production falls. The decrease in demand for covid-19 and the drop in the price of crude oil caused "terrible results" in the industry, explains analyst Gonzalo Monroy, and "Petróleos Mexicanos is no exception."

The drop comes after Mexico agreed in April to cut a quarter of its daily production starting in May, about 100,000 barrels a day, to compensate for the collapse in demand due to covid-19. The collapse caused, among other causes, by flight cancellations and the decrease in road traffic in the midst of the pandemic, pushed the main oil-producing countries to establish a historic cut in production last April. In those negotiations, Mexico opposed Saudi Arabia, the world's leading oil producer, and refused to contract its total production by 23%. Instead, it managed to minimize its share of cuts thanks to an agreement with the United States.

For Monroy, however, the contraction reported this Monday "has little or nothing to do with the agreements" of the Organization of Petroleum Exporting Countries (OPEC). The director of the consulting firm GMEC attributes it, instead, to the current Administration's strategy for the company, which has frozen projects for the private sector and has promoted the resurgence of Pemex, with contributions of public money included. “Of the 20 fields projected, only 17 have an approved development plan. But in reality, only six have started production ”, he assures. Monroy adds that, in the absence of "significant discoveries", the production of priority fields, such as the Ku-Maloob-Zaap (Campeche) fields, "falls gradually and there is nothing to replace it."

“No government has given Pemex time to explore. We have reached a level of exhaustion of the fields of such a level that it is already very expensive to continue to extract oil from there ”, says Rosanety Barrios, analyst and former public official during the Government of Enrique Peña Nieto, now indicated by the former director of the company Emilio Lozoya of allocate bribes from the Brazilian construction company Odebrecht to the 2012 PRI campaign. "You have a company that explores and produces oil and loses just by doing it," he says. In the second semester of this year, the state company reported losses of 44.3 billion pesos (about 2 billion dollars).

The Mexican president, Andrés Manuel López Obrador, has wanted to boost the national industry since he came to power in December 2018. However, in 2019, oil production fell 7% to an average of 1.6 million barrels per day, the lowest level since the end of the 70s. The objective of the president, a native of Tabasco, the heart of the country's oil industry, to meet 2.4 million barrels per day by the end of the six-year term in 2024 remains still far away.

The analysts consulted agree on that point. “It is not a surprise”, criticizes María Valencia, an internationalist expert in energy. "They attribute it to a lack of infrastructure, climate problems and operational problems, but the company does not have a stable financial capacity that allows them to increase this production," he says. "It is a situation that comes from behind, even before this six-year term, but these results are key to this Administration."

Source: elparis

All news articles on 2020-08-25

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