Production reached its lowest level in 45 years, reflecting slippage at Pemex but also amongst operators that won contracts in the oil rounds.
Mexican crude oil output went to 1.56 million barrels per day in April, the lowest since 1979 (when Petróleos Mexicanos-Pemex-was the country's single producer). With this result, Mexico completed eight months of continued production declines, reflecting both reductions in extraction rates from Pemex and the private companies awarded contracts in 2016.
Total national production in April was 2.2% below compared to the previous month, and 6.4% down in year on year terms. However, excluding condensates or gas, the year on year drop was 16.4%, according to the National Hydrocarbons Commission (CNH).
The overall decline has been driven by lower extraction rates at the blocks assigned to Pemex. In April alone, output in the latter fell by 2%, to 1.39 million barrels per day, the lowest level since before October 1979, when production It was 1.51 million barrels per day.
The CNH report also indicates that the 412 assigned areas under the operation of Pemex, saw production declining 5.5% in year on year terms. However, compared to the last year of the previous administration, in 2018, the fall was 23.5% in April.
When it comes to the contracts awarded through tenders by the last administration, production also reached a minimum since March 2022: 172,823 barrels per day in April 2024.
This volume was 3.8% lower month to month in April this year, though 3.5 times higher than that reported in the fourth month of 2018.
According to Arturo Carranza, a specialist in the Mexican energy sector, the numbers reported by the CNH show a slight, but constant, reduction in crude oil production in Mexico during the last year.
On Pemex's side, seems that the strategy of exploiting new fields has been insufficient. The assets that support the company's crude oil production --such as Ku Maloob Zaap-- are declining at a faster rate with respect to the volume of new fields added.
"By refusing to modify Pemex's business model to allow the company to partner with private companies in the exploration and production business, the prospect of an increase in crude oil production by this oil company has been closed," said the analyst.
And on the side of private operators, the reality is more complex. The companies that won contracts in the oil rounds have not incorporated significant production volumes because they have focused on wells that have infrastructure to transport the crude. It would seem that in the absence of new oil rounds, which make attractive blocks available to operators, this scenario will hardly change.
It is worth remembering that until the first half of March --after Italy's Ente Nazionale Idrocarburi (ENI, which is the private company extracting the most oil in the shallow water field contract obtained in Round 1.2, during the last administration) announced its first resignation of a contract in Mexico-- 40 contracts more have undergone partial or total resignations, out of a total of 111 signed during the previous government.
A third of contracts awarded during the previous administration was returned partially or totally through last January due to lack of exploratory success. These returned areas add to 42,958 square kilometers, which accounts for 23% of the total awarded (184,000 sq. km.) Out of the total, 24 areas were fully returned, thus leaving Mexico with jus 88 exploration and production contracts as of December 2023.
