Oil production in Mexico: progress and challenges for the future of energy

Oil production in Mexico slows its decline: reserves grow for a second year but only by 0.28% The Mexican oil horizon for the next decade is uncertain. Despite the push that the López Obrador government has given to the state-owned oil company, Pemex, over the past six years through direct capitalizations of nearly a trillion pesos, the country's oil reserves have reported a growth of 0.28% in one year. The report from the National Hydrocarbons Commission indicates that the total hydrocarbon reserves as of January 1, 2024 in Mexico amounted to 23.146 million barrels of crude oil equivalent, a marginal increase compared to the 23.081 million recorded in 2023. "It is the second consecutive year in which an upward trend is observed and the trend of declining reserves that has been experienced from 2013 to 2022 is reversed," said Alan Barkley, Director of Reserves at the CNH, during the report presentation. The proven oil reserves, known as 1P, with a 90% probability of extraction, amount to 8.383 million barrels of crude oil equivalent, representing a 2.7% growth compared to 2023. With a production rate of 961 million barrels per year, this volume of reserves will last about 8.7 years, a decrease from the 8.9 years calculated the previous year, according to CNH forecasts. "The most important thing is that the recovery is taking place in the proven reserves, which are the most real, and for the country, it is crucial to have this information in order to develop a realistic policy," commented Commissioner José Alfonso Pascual during the report presentation. According to calculations by this commissioner, if crude extraction were to maintain a rate of two million barrels per day, the sum of all these reserves would guarantee the country's oil future for the next three decades. In a secondary position, the 2P reserves, which include proven reserves plus probable reserves with a 50% feasibility of commercialization, amount to 15.530 million barrels of oil, showing a 2.6% increase compared to the previous year. The CNH detailed that in the last 12 months, there has been a reclassification of probable and possible reserves towards more certain proven reserves. By product, oil reserves totaled 16.386 million barrels and natural gas reserves were 34.858 billion cubic feet. Mexico is a country with mature oil fields. The report from the regulatory body stated that there are currently 793 oil fields with reserves, of which 86% are operated by Pemex and 14% by private companies. In 2023, commercial discoveries were reported in 12 fields, of which ten are new: Xale, Tentok, Etkal-NE, Techiaktli, Bakte, Cibix-401EXP, Platao, Yawa, Obba, Macuil-SE. Two new fields were added to the Vernet field, and the Macuil field had been previously discovered but not included in reserve consolidation due to contingencies. Héctor Moreira, a commissioner at the CNH, reflected that although Mexico has more than 700 fields, only 10 account for production, with the Trión field being the largest in terms of reserves under review. "It is very interesting to see how our industry is highly concentrated in a very small number of fields," he said. Campeche, Veracruz, and Tabasco account for 87% of these resources. The state-owned Pemex and private companies currently extract 1.8 million barrels of oil per day. However, in April of this year, the world's most indebted oil company with a debt of $110 billion reported a production decline to 1.4 million barrels of crude oil per day, its lowest level in 45 years. The production collapse of the state-owned company coincided with the explosion on its Akal-B offshore platform in Campeche. This event has raised concerns about safety and Pemex's ability to maintain its production levels in a context of increasing competition and technical challenges. The current outlook for the oil industry in Mexico reflects progress in reserves, but also highlights the need to effectively address the challenges facing Pemex, both in terms of production and maintaining safety in its operations. The increase in proven reserves is encouraging, but solid and sustainable strategies are required to ensure the long-term viability of the Mexican oil industry. Diversification of energy sources and modernization of infrastructure are key aspects that must be considered to ensure a stable and prosperous future in the country's energy sector.