Mexico City —
Mexican President-elect Andres Lopez Obrador has said the country’s oil production will climb to 2.6 million b/d by the end of his six-year term from 1.8 million b/d today. To achieve this, he is expanding Pemex’s exploration and production budget by $4 billion to $11 billion next year and will award new drilling contracts as soon as his administration begins in December.

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However, an analysis of Mexico’s upstream suggests it is unlikely crude production will be raised that much during Lopez Obrador’s term, which ends in 2025.

S&P Global Platts Analytics expect Mexico’s oil output will continue decreasing due to a decline on mature fields, bottoming in 2021 at 1.74 million b/d and then climbing to 1.94 million b/d by 2030 as new deepwater projects begin production.


**State oil company Pemex’s base forecast calls for production to reach 2.14 million b/d by 2021. Under its enhanced projection, the company will produce 2.45 million b/d by 2021. However, analysts doubt Pemex can achieve either projection.

**Pemex needs multiple new projects to offset mature field losses. Years of underinvestment in exploration, resource shortages, and limitations to farm out projects have prevented Pemex from achieving this. Pemex could raise output from existing fields by increased drilling, but that will hasten their decline by depleting their reserves more rapidly.

**Pemex’s largest challenge is the terminal decline of its Ku-Maloob-Zaap asset, where output is expected to fall to 440,000 b/d by 2025 from 815,000 b/d in June.

**Several of Pemex’s mature onshore fields in southern Mexico could see a production decrease to 100,000 b/d by 2022 from 240,000 b/d in 2018 unless the company finds a partner to invest in these fields.


**Pemex over the last three years has made 11 onshore and shallow water discoveries that could be developed in short to mid-term, with combined 2P oil reserves of 592 million barrels.

**From these, Pemex has expressed interest in developing the Xikin, Suuk, Pokche and Ixachi fields. Platts Analytics estimates these fields could produce a combined 135,000 b/d. However, there are no guarantees all these projects will be developed, and their economic feasibility is unknown. Pemex has to take a Final Investment Decision on any of these projects.


2P reserves (million boe)

3P reserves (million boe)

Potential output peak (b/d)

Years of development before peak
Xikin 190 190 72,000 3
Esah 120 120 44,000 3
Ixachi 67 120 27,000 2
Suuk 50 205 20,000 2
Koban N/A 205* 20,000 3
Cheek 40 40 16,000 2
Pokche 36 186 15,000 2
Hok 30 30 12,000 2
Octli 28 28 11,000 2
Jeetsu 20 20 8,000 2
Valeriana 11 61 5,000 2
Total production: 592 1000 250,000
*Koban reserves are BOE.


**Pemex currently is working to boost output at its Ayatsil-Teke-Utzil and Ek-Balam projects, which would add 219,000 b/d by 2024.

**Pemex has awarded contracts for new pipelines to boost production at Xanab, Onel, and Kab. Their combined 2P oil reserves is 483 MMbbl, producing 180,000 b/d in June.

**Pemex plans to tender again its Maximino-Nobilis deepwater and Ayin-Batsil shallow water projects. Their combined potential production peak is 280,000 b/d, but not until seven years after the tenders are awarded.


2P reserves (million boe)

Current production (b/d)

Expected peak production (b/d)

Peak production year
Ayatsil-Tekel-Utzil 1,380 48,000 200,000 2024
Ek-Balam 460 33,000 100,000 2021
Xanab, Onel, Kab 460 180,000 N/A N/A

Pemex projects to be farmed out

Name 3P reserves (million boe) Expected peak production (b/d) Peak production year
Maximino-Nobilis 1430 200,000 Seven years after awarding date
Ayin-Batsil 466 80,000 Three years after awarding date


**Despite awarding over 110 upstream contracts, it could take at least five-10 years for the majority of offshore blocks awarded during auction rounds to begin production.

**First private projects expected to begin production are Trion, Zama, Amoca, Hokchi and Ixchakil-Pokoch with the sum of their output peaking at 390,000 b/d by 2025.

**Mexico’s National Hydrocarbons Commission estimates that if all deep and shallow water areas awarded in auction rounds 1.4 and 2.1 were developed, these could yield 1 million b/d by 2027. However, it is improbable all areas will yield successful discoveries, and that all blocks will be developed simultaneously.

**Mexico has yet to award 14 heavy oil fields in Campeche Bay, which could produce a peak 180,000 b/d after five years of being awarded, CNH estimates.



2P reserves (million boe)

Potential output peak (b/d)

Peak production year

Hokchi PanAmerican 187 30,000 2021
Amoca Eni 412.5 90,000 2022
Zama Talos N/A 150,00 2022
Ixchakil-Pokoch* Fieldwood 86.4 N/A N/A
Trion** BHP Billiton 475 120,000 2025
*Fieldwood hasn’t published the results of its appraisal activities in both fields. The company is currently tendering the project’s EPC.
**BHP clasiffies these as contingent resources


**Mexico has over 30 billion boe of potential shale resources, Pemex has estimated. Pemex plans to drill 21 appraisal shale wells with the aim to start mass oil shale production by 2021 if situations are favorable.

**Early estimates from operators put initial oil production at the Tampico-Misantla Basin’s Pimienta shale formation at 1,200 b/d.

**Pemex faces multiple obstacles to develop its shale portfolio such as lack of infrastructure, water availability and social opposition to develop its shale portfolio.

**The future of Mexico’s shale oil is uncertain as Lopez Obrador has pledged to ban fracking. Although even without a ban, Platts Analytics expects Mexico’s shale oil resources will be developed beyond 2030.

— Daniel Rodriguez,

— Edited by Richard Rubin,

The conference brings together the leading organizations and government institutions in Mexico’s energy industries, delivering critical information about the transformation of Mexico’s energy markets. If you work in energy in Mexico, this is the place to be.


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