Mexico starts charting independent oil flows

OREANDA-NEWS. August 29, 2016. Mexico has begun reporting independent oil and natural gas production that kicked off this year following the historic opening of the oil industry.

The small but symbolic production was largely inherited from state-run Pemex, which remains the country's dominant producer. But the private-sector output is expected to grow significantly in the medium term as more upstream exploration and production contracts are awarded.

Private-sector companies produced 1,478 b/d of crude and around 700,000m3/d of gas in May 2016, representing the first independent production since the nationalization of Mexico's oil sector in 1938, according to a first-of-its-kind report from the Mexican Petroleum Fund (FMP).

The FMP is mandated to report the private-sector crude production under a 2014 energy reform that revoked Pemex's monopoly.

Independent companies such as Canada's Renaissance and Mexico's Diavaz that won blocks in an onshore tender last year took over operations from Pemex in May after signing their contracts, and are now working on increasing output.

The onshore tender was part of Mexico's staggered first bidding round that started in December 2015.

Pemex produced 2.174mn b/d of crude and 5.841bn ft3/d (164mn m3/d) of gas in May.

Mexico announced yesterday it had awarded six of the 25 blocks from the 2015 onshore tender to runner-up bidders, after some winning bidders decided not to execute the contracts.

The blocks were awarded to eight Mexican firms and two foreign companies, some of which were in consortiums.

Mexico also awarded five shallow-water blocks last year, which are expected to start producing in 2018. A fourth tender for high-profile deepwater acreage will take place in December 2016.