Pemex Boosts Crude-Oil Output to Try and Break 7-Year Slide

MEXICO CITY - Mexico's state-owned oil company Petroleos Mexicanos, or Pemex, said Tuesday that it expects to increase crude-oil production in the final months of the year, which will allow it to match 2011's output of 2.55 million barrels a day on average and to avoid an eighth-straight year of declining oil output.

Pemex production chief Carlos Morales said during a conference call that more drilling has allowed Pemex to increase crude production to about 2.58 million barrels a day currently, and that he expects levels around 2.6 million barrels a day in December to make up the production gap.

In the January-to-September period, Pemex produced an average of 2.539 million barrels of oil per day, putting it on pace for another year-on-year slide. Pemex's oil output has fallen every year since hitting its peak in 2004 at about 3.4 million barrels a day.

Pemex executives have promised to stop the slide in past years, and have managed to reduce the year-on-year decline but not to turn it around.

Mr. Morales also said that Pemex expects to tender contracts for the onshore Chicontepec site this year under the new integrated contract model that allows private companies to run their own drilling operations in Mexico, but not to keep any of the oil and gas. Rather, Pemex pays the contractors a per-barrel fee with incentives for beating production targets.

Pemex expects to use the integrated contracts next year for deep-water drilling in the Gulf of Mexico, along with a shale-gas tender, and then a new round for mature fields in the southern region, Mr. Morales said.

So far, Pemex has used the contracts just for mature fields in the south and the north.


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