Oil

Pemex gasoline production reaches lowest level since 1992

El Economista reported on 19 December 2016 gasoline production from Pemex has reached its lowest levels since 1992. Gasoline production reached an average of 341,023 barrels per day (bpd) from January to October 2016 (El Economista). Production of premium gasoline from January to October 2016 stood at an average of just 9,700 bpd, a 45.8 percent decrease from the same period of 2015 when the company produced 17,900 bpd (América Economía). Gas shortages across Mexico have recently caused concern and Pemex clarified the shortages were due to bad weather issues which have prevented ships from unloading supplies in Tuxpan, Veracruz. Although Mexican refineries have experienced operational issues which have led to decreased production, Pemex insisted it was not the cause of gasoline any shortages (América Economía).

Mexico agrees to reduce oil production

Mexico reached an agreement with OPEC and several other oil-producing nations on 10 December 2016 to decrease crude oil production by 100,000 barrels per day (bpd) (El Financiero). According to Pemex’s business plan, Mexico will join the global agreement to help alleviate the excess supply of oil, which has been blamed for low prices (El Financiero). Sources from the Mexican Energy Secretariat stated the agreement would restore balance to the oil market and ensure international energy security for both oil producing and consuming nations (Milenio). Altogether, non-OPEC producing countries agreed to cut their crude oil production by a total of 558,000 bpd, adding to the 1.2 million bpd reduction announced by OPEC on 30 November 2016 (Milenio, El Financiero).

Shell to invest US$400 million in PDVSA Lake Maracaibo joint venture

State oil company Petróleos de Venezuela (PDVSA) President Eulogio del Pino announced on 6 December 2016 that Royal Dutch Shell would invest US$400 million to increase crude production at a joint venture with PDVSA in Lake Maracaibo. The Corporación Venezolana del Petróleo, a subsidiary of PDVSA, controls 60 percent of joint venture Petroregional del Lago S.A. and Shell owns the remaining 40 percent (La Patilla). According to Del Pino, Shell's investment will allow production at the joint venture to increase by 344 million barrels of crude between 2017 and 2035, or by 52,400 barrels per day on average. In a statement, PDVSA noted the total investment required for the project is US$2.8 billion (Panorama). 

Venezuelan oil prices rise following OPEC production freeze3

The Venezuelan Ministry of Petroleum and Mining reported on 2 December 2016 that the price of Venezuelan oil closed the week of 28 November to 2 December at US$40.47 per barrel, up from US$39.83 per barrel between 21 and 25 November. Taking the most recent figures into account, the average price of Venezuelan oil in 2016 registered US$34.32 per barrel, compared to an average of US$44.65 per barrel in 2015 (Globovisión). The Ministry attributed the rise in the price of oil to the 30 November decision from the Organization of the Petroleum Exporting Countries (OPEC) to cut production by 1.2 million barrels per day beginning in 2017 (La Patilla).

Venezuela to reduce crude production by 95,000 barrels per day

President of state oil company Petróleos de Venezuela (PDVSA) Eulogio del Pino announced on 30 November 2016 that Venezuela will reduce its crude oil production by 95,000 barrels per day (bpd). The cuts will place the country's daily production below 2 million bpd for the first time in 30 years (Efecto Cocuyo). Venezuela's production cuts are part of a 30 November agreement by the Organization of the Petroleum of Exporting Countries (OPEC) to reduce the majority of member states' crude production by an average of 4.7 percent, limiting their output by 1.2 million bpd beginning on 1 January 2017 (Tal Cual).

Pemex and Chevron team up to bid on deepwater contracts

Mexican National Hydrocarbons Commission (CNH) President Juan Carlos Zepeda announced on 28 November 2016 Pemex and Chevron will partner up in an auction for deepwater contracts in the Gulf of Mexico (SDP Noticias). The CNH released a complete list of bidders for ten deepwater block featuring fifteen participants from ten countries in bidding for the right to explore and exploit deepwater hydrocarbons in the Trion field (Economía Hoy). Pemex also registered to participate as a singular entity along with other major companies including Exxon Mobile, Statoil, and BP, among others. The awarded blocks will be announced on 5 December 2016 (El Financiero).

Ecuador in favor of oil production reduction

In the next OPEC meeting on 30 November 2016 in Vienna, Austria, Ecuador will support and advocate for mechanisms that lower and freeze oil production to stabilize the declining prices (El Universo, 25 November 2017). Ecuador’s Hydrocarbons Minister Jose Icaza Romero revealed there are internal discussions between OPEC members to reduce production between 4 to 4.5 percent. Icaza explained Ecuador’s concept is to reasonably reduce production, and eventually freeze it. He added Ecuadorian technicians are presently in Vienna, looking to find consensus between OPEC nation members (America Economia). 

Venezuela and China sign US$2.2 billion energy deals

Venezuelan President Nicolás Maduro met with a delegation from the state-owned China National Petroleum Corporation (CNPC) in Caracas on 17 November 2016 to sign energy deals worth US$2.2 billion. The agreements cover investments in joint ventures with Venezuelan state oil company Petróleos de Venezuela (PDVSA) where CNPC has a minority holding, such as a deal to increase production by around 277,000 barrels per day in the Orinoco Oil Belt (América Economía). CNPC and PDVSA also agreed to construct an oil refinery in Jienyang, China, that will process over 400,000 barrels of oil per day (Globovisión). According to Maduro, the projects to increase oil production are backed by a Chinese credit line of up to US$9 billion (América Economía).

Mexican federal police and Pemex find hidden oil taps in Tamaulipas

The Mexican National Security Commission (CNS) reported Federal Police, together with Pemex personnel, detected several illegal oil taps in Tamaulipas on 12 November 2016 (Proceso). A total of nine clandestine oil taps were found in different points in the areas of Altamira and Ciudad Madero in southern Tamaulipas. Federal Police carrying out surveillance work along the Madero-Cadereyta pipeline were alerted to the presence of armed people guarding a pipe near a vehicle parked on the side of the Tampico-Mante highway (El Financiero). The CNS confirmed the seizure of six vehicles, including several trucks with drums for holding fuel (La Jornada). In the first eight months of 2016, Tamaulipas has recorded 547 instances of illegal oil tapping, third among Mexican states, behind Puebla and Guanajuato (El Financiero).

Mexican energy secretary announces auction for oil blocks

The Mexican Energy Secretariat (SENER) announced on 14 November 2016 it plans to generate an investment of US$1 billion through an offering of fourteen licensing agreements for the exploration and extraction of hydrocarbons (Forbes Mexico). The third auction of Ronda 2, which is set to be decided on 12 July 2017, will feature 25 fields and areas up for bidding, organized under 14 blocks. The National Hydrocarbons Commission (CNH) indicated that four of the blocks in the Burgos Basin only contain gas, while the remaining blocks in Tampico-Misantla basin along with others in Veracruz and Cuencas del Sureste contained both gas and oil (La Jornada and Forbes Mexico). 

PDVSA signs US$1.45 billion oil deals with Indian and local firms

State oil company Petróleos de Venezuela (PDVSA) signed US$1.45 billion in oil deals with Indian and Venezuelan firms on 4 November 2016. PDVSA finalized a deal with Indian state oil company ONGC Videsh Limited to invest US$318 million in the Indovenezolana joint venture in the Orinoco Oil Belt to double crude production from 20,000 to 40,000 barrels per day (Tal Cual). The second deal, worth US$1.13 billion, was signed with Venezuelan firm Delta Finance BV to increase production from 420,000 to 855,000 barrels of crude per day at the joint venture PetroDelta (Efecto Cocuyo). At the signing, PDVSA President Eulogio del Pino stated Venezuela has committed US$10.7 billion in financing for its energy-related joint ventures over the past two years (Panorama).

Pemex seeking farmout alliances for oil exploration

Mexico’s state-owned Pemex reported in its latest business plan it will seek ten farmout partnerships with other oil companies over the next two years. According to El Financiero on 3 November 2016, Pemex will seek alliances for exploration at several sites in 2017, including the Trión deep water bloc in the Gulf of Mexico, the Ayatsil-Tekel-Utsil complex, and seven areas on land. For 2018, Pemex aspires to create partnerships for dozens of sites, including shallow water blocs in northern Mexico as well as areas for gas exploration at the Burgos and Veracruz blocs. The plans for farmout agreements come days after Pemex posted a US$6 billion net quarterly loss (El Economista, 28 October 2016).

Pemex allows pipeline access to private companies

Mexican state-oil company Pemex began allowing private companies to use its pipeline infrastructure on 26 October 2016 (Forbes). Energy Secretary Pedro Joaquín Coldwell announced the start of ‘open season’ for use of Pemex infrastructure and called the measure a significant step toward the liberalization of Mexico’s gas industry (El Financiero). In the initiative, 40 percent of pipeline capacity will be dedicated to Pemex processing and power generation, while private companies will use the remaining 60 percent for their operations (El Financiero and Forbes). Coldwell revealed the opening of pipelines to the private sector seeks to maximize the use of existing infrastructure (Forbes).