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Private companies in Mexico hit production record as Pemex struggles to meet goals

Highlights

Independent E&P companies increased crude oil output to 70,000 b/d in June

Three largest producers responsible for 50,000 b/d

Pemex struggling to meet own goals

Mexico City — Crude production by private operators in Mexico reached a new record in June as state oil company Pemex struggles to stop the decline of its own output, official data shows.

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Independent exploration and production companies increased their crude oil output to little under 70,000 b/d in June, the largest reading to date, data from the National Hydrocarbons Commission showed July 22.

The increase came as Eni, Petrofac and Hokchi Energy, the three largest producers, raised their output, the data showed. The companies together account for almost 50,000 b/d, the data shows.

According to data from the commission, or CNH, based on companies' existing plans, production by independent producers is expected to increase to 280,000 b/d by 2024, when this administration ends, and to over 400,000 at its peak in 2028.

The increase in the private companies' output comes as Pemex struggles to stop the decline of its production, which in the past years has been anchored by five fields, the data shows.

Maloob, Zaap, Ayatsil, Xanab and Ku, the largest producing fields in Pemex's portfolio, were responsible for 808,000 b/d or 48% of the total production at the state company, the data shows. The company has a total of 209 fields, the data shows.

Pemex struggling to meet own production goals

Pemex has been unable even to meet its own production goals, which have been revised down two times during the administration of President Andres Manuel Lopes Obrador.

Upon taking office in late 2018, Lopez Obrador claimed under his administration Pemex would be able to bring production back to 2.4 million b/d to fuel the development of the country, a figure not seen since 2014. The president lowered it in March to 2 million b/d, arguing it was better not to over exploit the reservoirs for the benefit of future generations. This week, Mexico told OPEC members it would not be able to reach 2 million b/d and would try to average 1.753 b/d until the end of 2022.

S&P Global Platts Analytics expects private production to help state oil company Pemex reach a production of 1.83 million b/d in 2022. Declines in Pemex fields will drag production, until two more operators, Talos Energy and BHP, begin production, in 2025, lifting output again, Platts Analytics data shows.