Mexico aims for global ‘impact’ with $37.7 billion investment in oil and gas fields

Gary Park, Petroleum News Calgary correspondent

Pemex, Mexico’s state-owned oil company, is focused on a hefty increase in oil and gas production over the next three years as part of the country’s goal of achieving a “bigger impact on the world oil market,” President Vicente Fox said May 27.

He said Pemex is targeting daily output of 4 million barrels of crude, up 700,000 barrels from current levels, and 6.8 billion cubic feet of gas, a jump of 2.4 billion cubic feet.

Those benchmarks are just part of an upstream expansion that will see $31 billion invested over the next 15 years on development of the Chicontepec Basin in southeastern Veracruz and two adjoining states, Fox said.

He said a further $6.7 billion is earmarked for the construction of 47 rigs and 56 pipelines for Mexico’s largest offshore venture.

Contracts with ICA-Fluor Daniel, Schlumberger

Pemex Director-General Raul Munoz said Chicontepec, which has initial reserve estimates of 13 billion barrels of oil equivalent, has been largely unexploited because of technical challenges, although 300 wells drilled in the 1970s were all “productive.”

Industry sources have identified the challenges as low porosity rock in Chicontepec, which translates into low well production and high declines rates.

Munoz said recent offshore finds will see Pemex replace close to 100 percent of its offshore reserves by 2006 -- a claim that is questioned by analysts who note that the current replacement rate is only 40 percent and includes both probable and possible reserves.

In fact, Pemex reported to the U.S. Securities and Exchange Commission that it produced 1.5 billion barrels of oil equivalent in 2002 and replaced only 124.8 million barrels in the proven category, or a replacement rate of just 8.3 percent.