- Not only have reserves been replenished to 100% capacity, but they have also been increased by 400 million bcoe
- Oil production has increased for the third consecutive year, which has not been achieved in the last 20 years
- He stated that during the remainder of this administration, the efforts to rescue energy sovereignty will be intensified
The CEO of Petróleos Mexicanos (PEMEX), Octavio Romero Oropeza, officially inaugurated the Mexican Oil Congress (acronym in Spanish: CMP), which was held from the 6th to the 9th of July in Villahermosa, Tabasco, a key city for the institution's growth due to the expansion of crude oil exploration and extraction in the 1970s, which has now once again become fundamental thanks to the discovery and development of new fields, which have been detected thanks to the operational excellence that characterizes the current administration.
During his presentation, the director emphasized that the greatest strength of an oil company lies in its hydrocarbon reserves, and the level of production reflects the level of proven reserves. He pointed out that the country experienced a declining trend in reserves over the years, so that by the year 2000 it reached 25 billion barrels of crude oil equivalent (bcoe), while at the beginning of this administration reserves were only 7 billion barrels.
Romero Oropeza emphasized that almost four years into the current administration, not only have oil reserves been replenished to 100% capacity, but that they have also increased by 400 million bcoe, so that, with more than 60 billion bcoe in prospective resources in both conventional and non-conventional basins, Mexico has become a viable oil-producing country.
He said that changes in exploration strategy, focused on conventional shallow water and onshore basins, has been the foundation for the company’s converting to production using a concept of accelerated field development, as well as for the increase of 1P reserves in this administration, during which 39 new fields have been discovered. By the end of June this year, a further eight new fields were located in the states of Veracruz, Tabasco and Campeche.
Among these new additions are the Quesqui and Ixachi fields, as well as the deep field Tupilco. The company's goal for 2022 is to drill 78 new exploratory wells by the end of the year, which will certainly lead to the addition of new fields.
The PEMEX CEO pointed out that the institution currently has the best commercial success performance among all private and national oil companies with 47%, placing it above the largest operators in the world; similarly, its cost of discovery is US$3.40 per barrel, a lower figure than the global average and lower than companies such as Shell, Equinor and Petrobras. The result of this accelerated development has made it possible to reach a daily production of 399,000 bpd and 1.173 billion cubic feet of gas per day to the national supply through the development of new fields.
He also pointed out that the downward trend bottomed out in January 2019 at the beginning of this administration, when it reached 1,641,000 barrels per day, which signified a decline of 7% per year since 2005. But as of April 2019, production stabilized, and for the third consecutive year there has been an increase in oil production, something that had not been achieved for 20 years, so that during the first days of July 2022, production averaged 1,803,000 barrels, with a projected production of 2 million barrels per day by the end of 2024.
He emphasized that, despite the fact that the decline of mature fields constitutes the greatest challenge for any oil company, 385,000 barrels have been added through oil well maintenance operations, in addition to the increments in production as a result of major repairs and finishing other construction projects, which amount to 299,000 barrels; therefore, the final balance for this institution is approximately 130,000 barrels of increased production.
Octavio Romero affirmed that operational excellence has been successfully applied in PEMEX, and well drilling is the area where this strategy has achieved the best results. Such is the success story of the Yaxché field, where drilling times have been reduced three times since 2019. Additionally to the decrease in equipment rental costs, it was possible to push production of each well drilled forward by 64 days and reduce drilling times in exploratory wells by an average of 53 days, depending on depth.
He further stated that during the COVID era, the Mexican oil company was the only company in the world that did not stop investments, with the exception of Petrobras, which resumed investments in 2021, which clearly demonstrates the reason for the positive results achieved. And as a result of the operational excellence program, cumulative savings of 67 billion pesos have been made in 2022, and we expect to achieve approximate savings of 80 billion pesos by the end of this year.
He also recalled that in January of this year the acquisition of the Deer Park refinery located in Houston, Texas was completed. This is an operation that has proven to be such a success that it has exceeded expectations, and as a result of the profits it generated during the first half of this year, the investments made have been amply recovered; however, the most significant aspect of this acquisition is that PEMEX has been able to increase its production by more than 250,000 barrels of gasoline per day through this refinery.
With regard to oil refining, Romero Oropeza said that Petróleos Mexicanos has increased its crude oil processing by more than 100%, from 519,000 barrels in November 2018, to 1.91 million barrels as of June 2022, including Deer Park.
He also confirmed that the actions undertaken by the current administration, such as the acquisition of Deer Park, the construction of the Olmeca refinery and the rehabilitation of the six existing refineries, including the construction of coking plants for two of them, will lead to meeting one of the objectives of the Mexican government, which is to achieve self-sufficiency in gasoline, diesel and jet fuel required for the country's development. The President's commitment to invest US$2 billion of our own resources and of international credits at special rates to reduce methane gas emissions in exploration and production processes by up to 98%, with two key projects for this purpose being the expansion of the Papan Measurement and Control Station and the Ixachi Separation Battery.
He stated that so far this year, the volume of gas flares has been reduced by 44%, increasing its use from 92% to 96%, with the aim of reaching 98% by the end of this administration.
He said that, despite the increase in crude oil processing in the National Refining System, as well as in oil production, exports have remained at around one million barrels per day, which, given the high price of the Mexican blends, is currently 75% above the budgeted amount. These resources are very important for financing the country's social and economic development.
He noted that the highest income of Petróleos Mexicanos is related to the domestic fuel sales. As a result of the Energy Reform, the company had been losing its market over the last five years. That is why, as of September of last year, a strategy to recover sales in the domestic fuel market was initiated, which has resulted in a 21% increase in gasoline sales during the first half of 2022, compared to the same period of the previous year, as well as a 65% increase for jet fuel and 47% for diesel.
Furthermore, he added that the acquisition of goods and the procurement of works and services are invariably carried out with absolute transparency and free of corruption, which has led to savings of 76.302 million pesos during the current administration. In fact, since March 2021, all contracts currently in effect at Petróleos Mexicanos are posted in their entirety on the official website -which is updated on a monthly basis- and the payment schedule for suppliers and contractors is also made public.
In the same context, as of July 1 of this year, the use of the e-Signature was made mandatory for all supply contracts that PEMEX enters into, a measure that streamlines contractual procedures and at the same time makes each of the legal instruments that are formalized with suppliers and contractors traceable and reliable.
He pointed out that, from a bleak outlook across all indicators (declining crude oil production, processing and exports; a sharp loss of the domestic market; growing debt; high levels of fuel theft; lack of investment in the maintenance of production centers; and a series of corruption scandals that so far have made us an embarrassment to the world), in December 2018, today we can say with satisfaction that the image of PEMEX is a very different one.
He acknowledged that there is still a long way to go, but the people of Mexico can be confident that in the remaining time of the current administration, efforts will be intensified, and all capabilities will be put to the test to safeguard our energy sovereignty.