Mexico’s Private Oil Companies Could Add 700,000 Bpd By 2030

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Mexico’s Private Oil Companies Could Add 700,000 Bpd By 2030

Crude oil projects involving private companies in Mexico could bring an additional 704,000 bpd to total national oil production by 2030, BNAmericas has reported, citing a commissioner from Mexico’s oil and gas regulator, CNH.

This year, the output from projects involving private companies is seen at 264,000 bpd. This means this output is set to grow by some 18 percent annually, according to commissioner Hector Moreira.

What’s more, more than half of that additional oil production in 2030 will come from projects that are exclusively operated by private companies, at 54.2 percent of the total. Another 35.2 percent will come from farm-out contracts between Pemex and private players. The rest will come from projects exclusively operated by the Mexican state-owned energy major.

The contracts that made possible this additional output were introduced by the previous Mexican government, which came into power with ambitious plans for opening up the country’s energy industry to foreign players to stimulate growth.

As part of the reforms that the Pena Nieto government introduced, public and private companies were allowed to bid against each other to develop oil and gas blocks. At the same time, Pemex had the option to sign contracts with private companies to operate blocks originally awarded to the state-owned company in case it could not afford to develop them on its own.

When the government of Andres Manuel Lopez Obrador replaced the Pena Nieto administration, all oil and gas tenders were canceled until further notice, as the new administration began investigating the already signed contracts for evidence of corruption.

At the same time, the government seeks to restore Pemex’s dominant position in the local oil and fuels market. Earlier this month, the Mexican Congress passed a bill that would strengthen Pemex’s hold over the local fuel market by removing a stipulation that prioritized private company fuel sales over those by the state-owned major.

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