MEXICO CITY - Mexico's state-owned oil company Petroleos Mexicanos, or Pemex, hasn't found another supergiant oil field to replace the declining Cantarell megadeposit, but it does have a broader portfolio of projects than in the past that will generate crude-oil production similar to when Cantarell was at its peak, Pemex exploration and production chief Carlos Morales said Wednesday.
"It can be frustrating when we announce a new oil find and people ask 'is it bigger than Cantarell?'" Mr. Morales said at an oil conference. "No, it's not bigger than Cantarell. There is only one bigger than Cantarell, and it's in Arabia."
Rather, Mr. Morales said, the oil company's 20 exploration projects and 18 production projects should lead to crude-oil output in 2027 of around 3.5 million barrels a day, which would surpass the nearly 3.4 million barrels a day Pemex hit in 2004 when Cantarell was at its peak.
Cantarell's decline from around 2 million barrels a day in 2004 to about 400,000 barrels a day currently has led to eight straight years of declining oil production in Mexico.
Assurances in recent years by Pemex officials that the company was on the verge of stopping the slide haven't panned out. In the first seven months of this year, Pemex crude-oil production averaged 2.536 million barrels a day versus the average for full-year 2011 of 2.55 million barrels a day.
Mr. Morales said that Pemex no longer relies on a few oil complexes for most of its production like it did in the past, but is rather developing projects on land, in the shallow waters of the Gulf of Mexico and, beginning a few years ago, in the deep waters of the Gulf where Pemex recently found it's first significant deep-water deposit.
Pemex also has a new mechanism for developing oil projects that allows private companies to do a broader range of work for Pemex under contract, Mr. Morales said.
With the use of "integrated contracts" approved by Congress in 2008, Pemex can hire a company to carry out all aspects of an oil project, including investment. Pemex, in turn, agrees to pay a flat rate per barrel, with incentives for higher production. The Mexican government at all times owns the oil and private contractors have to sell all of it to Pemex.
Those contracts, Mr. Morales said, allows Pemex to have a broader portfolio of projects than if it had to invest in each one on its own.
Integrated contracts have already been assigned for mature fields in southern and northern Mexico, and are being prepared for use at the geologically difficult Chicontepec site than runs inland along part of the Gulf. Integrated contracts are also being prepared for the deep waters of the Gulf, the Pemex executive said.
And although Pemex hasn't found a new Cantrell, it has made significant finds in the shallow waters of the Gulf. Two of those projects alone, Mr. Morales said, could make Mexico self-sufficient in natural gas. Over the next 15 years, natural gas production in Mexico should nearly double to about 12.7 billion cubic feet a day, he added.
While Pemex is a major exporter of crude oil, it is a net importer of natural gas. In recent months, Pemex has been unable to meet demand by industry for natural gas, which has become more popular because of its relatively low price compared to other fuels. Pemex has significantly increased its imports of the gas, and the Energy Ministry has promised to create more pipeline infrastructure to meet demand in coming years.
Copyright (c) 2012 Dow Jones & Company, Inc.
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