Shine Trader Live reports:
In a bid to boost flagging oil production, Mexican President Leopoldo Lopez, in his proposed 2022 budget, increased spending plans for Pemex, the state oil company, to about $32 billion next year, up 17% from 2021. Of that, about $18bn will be invested in exploration and production, up 26 per cent year on year.
Mexico’s finance ministry expects Pemex’s oil production, including condensate, to reach 1.826m b/d by 2022, up 4.2 per cent from 2021.
Such generous budget plans reflect the President’s goal of reviving Pemex and making the country energy self-sufficient after more than a decade of declining oil production. However, belt-tightening is widespread in the global oil industry as the ongoing pandemic clouds the demand outlook and major economies increasingly focus on promoting renewable energy to combat climate change. Pemex’s plans to increase spending stand in stark contrast.
Pemex has been investing in onshore and shallow-water fields to boost production of condensate, an ultra-light oil. However, oil production continues to decline in major grades, such as Mayan, Mexico’s primary blend in 2021, as production declines in major offshore fields. Adding to the decline, Pemex lost about a quarter of its crude output in late August due to a fire at an offshore drilling rig in the Gulf of Mexico.
Pemex has said it aims to produce 1.8 million b/d by the end of 2021, up from 1.68 million b/d in the first seven months of the year.
In addition to offering a higher budget, the Mexican government also reduced Pemex’s profit-sharing tax to 40 percent next year from 54 percent in 2021. Mexico has begun refinancing Pemex’s debt after securing $12bn from the International Monetary Fund. Pemex has about $115 billion in debt, the highest of any oil company. Some observers are skeptical that the financial aid will be enough to ease Pemex’s debt problems.
In addition, Mexican President Leopoldo Lopez plans to build a new refinery in his hometown and refurbish dilapidated existing refineries, while increasing crude oil production to meet their needs. But the Dos Bocas refinery project is already over budget, and critics complain it is siphoning resources away from Pemex’s main drilling effort.
Reprint indicated source：Shine Trader Limited Live information