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Pemex allowed to increase spending at 60-year-old onshore field Jiliapa

Highlights

Pemex to spend $77 million through 2034

Company expects 2 million barrels of crude in site

Mexico — Mexico's state-owned oil company Pemex received approval from the country's regulator Nov. 19 to increase spending at a 60-year old onshore field, as production has not declined as expected.

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Mexico's National Hydrocarbons Commission, or CNH, approved modifications via webcast to Pemex's production plan for Jiliapa, an onshore field located in the state of Veracruz, where Pemex expects to obtain roughly 2 million barrels of crude and almost 2 billion cubic feet of gas. The modified plan approved by CNH will require Pemex to drill five wells at Jiliapa and spend $77 million through 2034.

The Jiliapa field is part of the areas Pemex decided to keep before Mexico opened the market to private participation through a series of oil tenders that began in 2015.

Jiliapa reached its production peak, around 7,000 b/d, between 1958 and 1967, then declined progressively to 1,100 b/d by 2008, CNH technical advisor Francisco Castellanos said during the webcast session. From 2009 to date, Pemex has produced around 600 b/d at Jiliapa.

However, the decline has not been as steep as Pemex had expected, and the company has seen 30% more production at the field compared with expectations. This increase has come despite Pemex failing to comply with its production plan, which required Pemex to drill four wells.

"Pemex has mentioned, its financial constraints have not allowed it to drill the four wells at Jiliapa, as it has preferred to use its available resources in areas with higher production," Castellanos said.

Commissioner Alma America Porres Luna recommended that the technical advisory team pay close attention to the compliance of this plan so Pemex can increase production.

"It is not one of the biggest fields in the country, but production is being added bit by bit," Porres Luna said.

Pemex's CEO Octavio Romero Oropeza has recently said the company will reach production of 1.9 million b/d by the end of the year as it initiates activities at 20 new projects the company has prioritized. In September, Pemex output 1.587 million b/d of crude, according to data from the Energy Secretariat.

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