Pemex CEO Sees First Production Ventures as Early as This Year
Petroleos Mexicanos, Mexico’s state-owned oil producer, expects to sign its first exploration and output agreements with international companies as early as year-end after Mexico abolished its 75-year monopoly.
Pemex will initially focus on mature and deep-water fields to establish the ventures, Chief Executive Officer Emilio Lozoya said in an interview. Associations in refining, transportation and petrochemicals can be done once congress approves so-called secondary legislation, which is expected in April, he said.
“We expect that in exploration and production, by the end of 2014 or beginning of 2015 we achieve the first investments or associations,” Lozoya said Jan. 25 in an interview in Davos, Switzerland, during the World Economic Forum. “The quickest way to monetize the investments that Pemex already did in exploration is through joint ventures. This means increasing output and oil income.”
President Enrique Pena Nieto ended the seven-decade-plus production monopoly held by Pemex last month, allowing foreign companies to produce crude in the largest supplier to the U.S. after Canada and Saudi Arabia. The overhaul may bring an additional $20 billion in foreign direct investment as soon as 2015, according to Bank of America Corp.
Pemex expects to start new wells in the next few months, helping it boost oil production to 2.6 million barrels a day, Lozoya said in the interview.
Output is currently 2.503 million barrels a day, according to preliminary data from the Mexico City-based company, the world’s fifth-largest oil producer. Production averaged 2.52 million barrels a day in 2013, the ninth straight year of declines as output at Mexico’s biggest discovery, Cantarell, plunged over the past decade.
The Mexican company is also seeking partners to help it maximize reserves in older fields. Schlumberger Ltd. (SLB), Petrofac Ltd. (PFC), and Alfa SAB (ALFAA) were among the winners to develop four mature oil fields in a 2012 auction.
Foreign crude producers have to wait about two years before they will be allowed to bid on their own fields for exploration and production without Pemex, Deputy Energy Minister Enrique Ochoa said in an interview this month.
Prior to granting operating licenses, the legal framework has to be determined and Pemex must select the fields it plans to continue to develop, he said.
Ochoa’s forecast lags behind the prediction of Victor Herrera, Latin American managing director at Standard & Poor’s, who said in a Dec. 20 interview pipeline and shale gas investment could be seen “very quickly.” Herrera said Mexico could see economic growth from energy industry changes as soon as the second half of 2014.