MEXICO DATA: Pemex crude output falls below 1.5 mil b/d in April for first time since Cantarell discovery

Crude production by Mexico's state-owned oil and gas company Pemex fell below 1.5 million b/d in April, data from the national upstream regulator showed May 23.

The figure, the lowest in over 40 years, shows how the output from the new fields developed in the current administration has not been enough to compensate for the decline of older, larger legacy fields which were once the bedrock of the Mexican petroleum industry.

Crude oil production, not including condensates, fell to a multidecade low at only 1.474 million b/d, a level not seen since the discovery of Cantarell, Mexico's largest field, in the late 1970s, the data showed.

Crude production by the private firms that operate in the country was also down to 85,117 b/d in April, compared with 100,467 b/d in the same month of 2023, the data showed.

Condensate production, coming mainly from recent onshore discoveries Quesqui and Ixachi, was slightly down in April at 273,922 b/d, compared with 296,970 b/d in April 2023, the data showed.

"Unfortunately, the decline continues," said Alma America Porres Lunas, an independent consultant and former CNH commissioner in her social media accounts. "Ixachi, Quesqui and Tupilco Profundo were not enough to stop the decline of the mature fields."

Under President Andres Manuel Lopez Obrador, Pemex has been instructed to maintain production levels steady by focusing on onshore and shallow-water deposits, where Pemex has certainty of resources.

During the last five years, the Mexican government has committed to strengthening state-owned hydrocarbon producer Pemex's role in the energy sector, but there is a limit to how much Pemex can do with respect to taking the risk and funding the investment required to grow the industry's infrastructure, Wood Mackenzie wrote in a report May 23.

"Although non-Pemex production through production sharing contracts grows by the end of the current decade, this upside won't be enough to counter the declining trend," said Adrian Lara, principal analyst, upstream Latin America for Wood Mackenzie. "There is a risk for a steeper decline in production post 2030 without major changes to the current government policy of forbidding new hydrocarbon bidding rounds or awarding exploration blocks."