Pemex crude output down by 9.8pc in second quarter

OREANDA-NEWS. July 29, 2015. Mexico state-owned Pemex reported a 9.8pc decline in average second quarter crude production to 2.225mn b/d compared with the same period last year, cementing a decade-long downward trend.

But June 2015 output recovered to 2.247mn b/d from a low of 2.201mn b/d in April, when a deadly fire at the Abkatun oil platform knocked 10,000 b/d off production.

Halfway through 2015, the company crude output remains short of its 2.29mn b/d target for the year.

In a conference call today, Pemex upstream manager Gustavo Hernandez Garcia said the second quarter production decrease reflected natural declines as well as the impact of the Abkatun incident, which also contributed to a 6.3pc decline in natural gas output to 5.399bn ft3/d (151mn m3/d).

Downstream, total crude processing shrank by 11.6pc to 1.06mn b/d, compared to 1.20mn b/d in the same period last year, reflecting scheduled and unscheduled maintenance and "operational problems resulting from the quality of crude supplied by producing areas" Pemex said. As a result, the company?s refinery utilization decreased by 8.4 percentage points to an unspecified level.

Pemex posted a net loss of 84.6bn pesos (\\$5.2bn), a 61.8pc increase from second quarter 2014. Echoing his previous explanations, Pemex chief financial officer Martin Beauregard blamed the company tax burden. "Cash flow is significantly affected by the current tax regime", Beauregard said.

Looking ahead, Pemex is preparing to migrate a first set of 10 existing service contracts to production-sharing contracts, after submitting required documentation to the energy ministry, the energy regulator CNH and the finance ministry.

The process has fallen behind schedule. Hernandez had said in March 2015 that the migration process involving a total of 22 contracts would be completed in the first half of the year.

So far only one contract for the Mision gas block, located in northern Mexico, appears to have advanced to the final approval stage.

Pemex is also planning to award farm outs in September.

The firm did not indicate whether it would participate in forthcoming upstream tenders that form part of the country?s historic first licensing round, after dropping out of the initial process that was awarded earlier this month.

Energy minister Pedro Joaquin Coldwell has said Pemex will "probably" compete for deepwater blocks that are expected to be offered in August, a month behind schedule.