Mexico City — Mexico will produce approximately two million barrels per day of oil and gas condensates this year, according to estimates by Norwegian consultancy Rystad Energy.
In an interview with Bloomberg Línea, Jorge León, Rystad Energy’s senior vice-president in Mexico, said that production has increased to above 1.9 million barrels per day of liquid hydrocarbons and will continue to rise.
“For this year we will have a growth of 80,000 barrels per day annually,” he added.
Mexico recorded an average annual production of 1.93 million barrels of crude oil and condensates per day through March 2023, according to the most recent data from the oil and gas regulator body, the National Hydrocarbons Commission (CNH).
Asked about the inclusion of gas condensates - known as natural gasolines because of their ease of refining compared to heavy crudes - in the measurement, León commented that separating them does not make “much sense” because in the end both go to refineries and are blended to obtain gasoline and diesel.
“The normal thing is that we talk about crude plus condensate,” said the former energy demand analyst for the Organization of the Petroleum Exporting Countries (OPEC) and former economist at British oil company BP.
His opinion coincides with the measurement of the US Energy Information Agency, which recently stated that Mexico has stabilized its oil production after 20 years of decline.
State-owned Petróleos Mexicanos (Pemex) began accounting for oil and condensates jointly at the beginning of the six-year term of President Andrés Manuel López Obrador (who is known as AMLO), while his government aligned the CNH with officials close to his administration, and which has begun to align the measurement toward Pemex’s accounting.
AMLO promised a daily production of two million barrels per day by the end of his six-year term in 2024, after cutting his initial target by 500,000 barrels per day during the Covid-19 pandemic.
Falling oil demand
Mexico faces a strategic problem in the face of falling oil demand in the coming decades due to the energy transition, in addition to the possibility of losing the window of opportunity to monetize the country’s oil and gas reserves to the maximum.
Rystad’s León said that Mexico’s advantage is the low cost of oil production, which oscillates around $17.80 per barrel, compared to the rest of the world, but it has a “very big” problem of decline due to its mature fields.
Pemex, producer of 95% of the oil and condensates in Mexico, faces the decline of its main oil asset, Ku-Maloob-Zaap, where it has also suffered two of its biggest accidents, but which it has partially compensated with the development of a score of priority fields such as Quesqui.
“Just to have constant production, you have to invest a lot,” León said.
But Mexico’s Energy Minister Rocío Nahle foresees that there will still be demand for oil in Mexico by 2050.
Rystad Energy forecasts that the price per barrel of oil will reach $102 dollars in the third quarter of the year in view of China’s post-pandemic economic growth, the continuity of OPEC cuts, as well as greater demand from the aviation sector, but in the medium term, world oil demand will continue to decelerate.