IHS Global Insight Perspective | |
Significance | PEMEX has released data on its reserves at the end of 2009 that puts Mexico's proven crude oil reserves at 10.4 billion barrels and the country's proved crude reserves-production ratio at just 10.2 years. |
Implications | However, there was also some good news—for the second year in a row the reserve-replacement rate was above 70%, with new discoveries leading to the incorporation of 1.774-billion-boe-worth of additional reserves last year. Of particular note is the discovery in the past two years of two finds in the Campeche Sound that could contain up to 2 billion barrels. |
Outlook | The announcement of new offshore finds is particularly welcome at a time when possible and probable reserves from onshore fields in the Chicontepec region are at risk of being downgraded; nonetheless the oil production outlook remains uncertain. |
Reserves Data Improves for Second Consecutive Year
Mexico's state oil monopoly PEMEX late last week announced that the country’s proven hydrocarbon reserves at the start of 2010 were 14.0 billion boe, down by 2.2% from 14. 308 billion boe at the start of 2009. Crude oil accounted for 74% of the total, or 10.4 billion barrels of proven reserves, the same level as the previous year, while the country's proven natural gas reserves at the start of 2010 stood at 16.8 tcf, down from 17.6 tcf the previous year. Based on 2009 annual production, Mexico's proved crude reserves are set to run out in just 10.2 years, although the reserves-production ratio for total proved, probable, and possible (3P) hydrocarbon reserves is a more positive 31.3 years. PEMEX also announced that its reserve-replacement rate for proven reserves as of 1 January was 77.1% compared with 72% last year, 50.3% in 2008, and considerably lower ratios for the preceding years of this decade. Although last year saw the largest volume of proven reserves from new discoveries incorporated in a single year since the current administration began its tenure, it was not clear to what extent the decline in production last year might also have helped to lift the reserve-replacement rate.
Mexican Proven Crude Oil Reserves by Type (bil. barrels) | ||||||||
2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | |
Heavy | 9.809 | 9.087 | 8.198 | 7.557 | 7.009 | 6.546 | 6.4 | 6.5 |
Light | 4.463 | 4.215 | 3.839 | 3.550 | 3.403 | 3.259 | 3.2 | 3.0 |
Extra light | 0.851 | 0.818 | 0.845 | 0.706 | 0.635 | 0.697 | 0.8 | 0.9 |
Total | 15.124 | 14.120 | 12.882 | 11.814 | 11.048 | 10.501 | 10.404 | 10.4 |
Source: Energy Secretary based on PEMEX data | ||||||||
Taking into account probable and possible reserves as well as proven ones, PEMEX's 3P hydrocarbon reserves stood at 43.1 billion barrels at the start of 2010 of which 30.5 billion boe was crude. New discoveries led to the incorporation of additional 3P reserves totalling 1.774 billion boe. However, as yet prospective reserves in deep waters of the Gulf of Mexico (GOM), where PEMEX claims it has detected areas with a hydrocarbons potential of around 52 billion boe reserves, have not been fully incorporated into its reserve estimates.
PEMEX's presentation of its latest reserve figures followed the earlier announcement by CEO Juan José Suarez Coppel, at an event to mark the 72nd anniversary of the nationalisation of the oil industry, of two important discoveries in the past two years in the Campeche Sound region in the GOM: the Ayatsil-Teckel heavy oil field and the Tsimin-Xux light oil find. He said that each of these fields holds over 1 billion barrels in 3P reserves.
Outlook and Implications
Despite the continued year-on-year decline in total hydrocarbon reserves—across all categories: proven, probable and possible—the fall in reserves was less marked in 2009 than the previous year and the reserve-replacement rate has improved for the second consecutive year, putting the country on track to meet the government's target of achieving a 3P hydrocarbons reserve-replacement rate of 100% by 2012.
This is good news, as the continued decline in reserves seen over the past decade has exacerbated concerns about Mexico's ability to maintain levels of crude production while output from the huge offshore Cantarell field continues to decline. Higher production from the Ku-Maloob-Zaap field in the Gulf of Mexico is helping to offset lower production from Cantarell, and despite signs that the rate of decline at Cantarell is stabilising, national production is still falling at an alarming rate. The challenge is to transform probable and possible reserves into future production. To this end PEMEX has been investing heavily in exploration in the Chicontepec Basin, and there are plans to draw up a new oil service contract model for deepwaters of the Gulf of Mexico. However, there are significant doubts concerning both these plans. As the cautionary statement at the beginning of PEMEX's reserve report indicated, its probable and possible reserve estimates, particularly for the Chicontepec project, may be revised by the National Hydrocarbons Commission (CNH). Although a detailed breakdown for this region was not included in the latest figures, according to data for the start of 2009, this complex of 29 fields covering a 3,731-sq. km area in the states of Puebla and Veracruz in the northern region is thought to hold 17.4 billion barrels of proved, probable, and possible reserves including around 53% of the country's probable and 55% of its possible crude reserves so any revision to reflect a less optimistic assessment of recovery rates than that given by the company could result in a significant downgrade of its 3P reserves. Meanwhile, with regard to prospective reserves in the GOM, delays in the award of modified service contracts mean that the incorporation of significant reserves from this area is still some years away.