CEO: Mexico's Pemex Eyeing Partners For Heavy Oil Projects
HOUSTON, March 6 (Reuters) - Mexico's state-run Pemex might bring partners into two heavy crude oilfields in the Gulf's shallow waters, the company's chief said on Tuesday, a move that could help ease a lack of heavy barrels in the Atlantic basin.
After nine bidding rounds in just three years and with a presidential election scheduled in July, Mexico's oil regulator has started a campaign to convince Pemex and foreign investors that this is the moment to develop much needed extra-heavy oil reserves.
"We are looking to increase production, including heavy crude, so we might put on the table some farmouts mainly for those fields that need secondary recovery strategies," Pemex CEO Carlos Trevino said at a news conference during the CERAWeek energy conference in Houston.
"The name of the game in Pemex right now is partnership," said Trevino.
On Monday, he said Pemex will look for partners for two deepwater blocks it just won in a January auction. He also said that this year the company will offer partnerships for its offshore projects Nobilis-Maximino and Ayin-Batsil, which failed to bring foreign capital last year.
The company also expects to form joint ventures at seven onshore projects recently submitted to the regulator to be put on the auction schedule, and plans to convert up to 22 service contracts into farmouts and other contracts.
The heavy oilfields of Ayatsil and Tekel could be offered after that, Trevino said. He did not elaborate on the specific timing.
Mexico's heavy oil activity is currently concentrated in the Pemex-operated Ku-Maloob-Zaap region in the Bay of Campeche, which produces 850,000 barrels per day (bpd), nearly half of the country's output. The volume is expected to start declining in the coming year, according to the National Hydrocarbons Commission (CNH).
Besides the mostly undeveloped Ayatsil and Tekel fields, operated by Pemex at the center of its drilling activities in the Gulf's shallow water, the Mexican government has in its portfolio two adjacent areas, Pit and Kayab, CNH chief Juan Carlos Zepeda told Reuters. He said these also could be offered in a bidding round.
"It's key that Pemex moves forward to farmout first as they have the largest and only operative field," Zepeda said.
Pemex exploration chief Jose Antonio Escalera said the auction could choose to have Pemex alone farm out its two oilfields, or offer the cluster of four fields along with the government. But talks have not started between Pemex and the regulator to decide that, he added.
The whole heavy cluster has recoverable reserves of more than 3 billion barrels with nearby infrastructure to transport and export the crude.
Wanted: Heavy Sours
"Heavy sour" no longer means cheap, unwanted oil barrels. Heavy versus lighter oil price differentials in the Atlantic basin have narrowed in recent months due to falling exports by traditional suppliers Mexico, Ecuador and especially Venezuela, whose output fell in 2017 to its lowest in almost three decades.
The only Latin American country consistently supplying the Atlantic with incremental volumes of crude is Brazil, whose new production coming from its vast deepwater reserves is mostly composed of medium sweet grades, not exactly what U.S. Gulf refiners need the most.
"We cannot leave our market to the Canadians," Zepeda said.
Canada's heavy oil exports have partially compensated for the lack of supply from Latin America, but transportation constraints often make it difficult for some Canadian producers to offer barrels to U.S. Gulf refiners at attractive prices.
The CNH estimates that Ayatsil, Tekel, Pit and Kayab could start producing about two to three years after being awarded.
(Reporting by Marianna Parraga Editing by Paul Simao, Lisa Shumaker and David Gregorio)
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Weatherford CEO's Rebound Plan Relies On Getting Smaller
- Iran Says Oil Market Is Too Tight For US Zero Exports Target
- China's Squeezed 'Teapots' Eye Petchem Path To Riches
- Baker Hughes: US Drillers Add Oil Rigs For Second Week In Three
- Venezuela Hands China More Oil Presence, But No Mention Of New Funds
- Falcon Oil Declares Commercial Flow Test Results for Shenandoah Well
- Macquarie Strategists Expect Brent Oil Price to Grind Higher
- Japan Failing to Meet Corporate Demand for Clean Power: Amazon
- Pennsylvania County Joins List of Local Govts Suing Big Oil over Climate
- UK Oil Regulator Publishes New Emissions Reduction Plan
- PetroChina Posts Higher Annual Profit on Higher Production
- US, SKorea Launch Task Force to Stop Illicit Refined Oil Flows into NKorea
- McDermott Settles Reficar Dispute
- Russian Navy Enters Warship-Crowded Red Sea Amid Houthi Attacks
- USA Commercial Crude Oil Inventories Increase
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- Oil Demand Outpaces Expectations, Testing Calculus on Peak Crude
- House Passes Protecting American Energy Production Act
- TotalEnergies Restarts Production in Denmark's Biggest Gas Field
- USA Oil and Gas Job Figures Jump
- Republican Lawmakers Say IEA Has Abandoned Energy Security Mission
- Blockchain Demands Attention in Oil and Gas
- Houthis Warn Saudi Arabia of Retaliation If It Backs USA Attacks
- Macquarie Sees USA Oil Production Exiting 2024 at 14MM Barrels Per Day
- Summer Pump Prices Set to Hit $4 a Gallon Just as Americans Hit the Road
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- Chinese Mega Company Makes Major Oilfield Discovery
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Another Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Vessel Sinks in Red Sea After Missile Strike
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Equinor Makes Discovery in North Sea
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension