Pemex oil output rises as new wells offset recent accidents

Amy Stillman 10/28/2021

MEXICO CITY (Bloomberg) --Petroleos Mexicanos reported a small increase in third-quarter production after adding new wells, which more than offset the impact of two accidents at its offshore operations.

Pemex’s oil and condensate output rose to 1.752 million barrels a day from 1.736 million in the second quarter, the company said in a statement Thursday. Production was 4.2% higher than a year earlier.

The gain comes despite the impact of a deadly fire on the company’ E-Ku-A2 platform in the Gulf of Mexico in August that saw oil production temporarily cut by a quarter. There was also a fire in July at the Ku-Maloob-Zaap cluster of offshore fields due to a gas leak from a marine pipeline.

Mexico President Andres Manuel Lopez Obrador has championed the state driller, and has made several efforts to help Pemex shore up its finances and increase production. 

On Wednesday, Pemex Chief Executive Officer Octavio Romero Oropeza told lawmakers that the government would be taking over the company’s future amortization payments, sending its overseas notes to a one-month high. The Finance Ministry has also said that it’s reducing Pemex’s profit-sharing duty next year to 40%, from 54% this year.

Production increased from the same quarter last year after the loosening of Covid-19 contingency measures, and the recuperation of output after Pemex’s FPSO Yuum K’ak’ Naab was shut in July 2020 for repairs because of a collision with a tanker.

The higher production numbers are also the result of including condensate, a very light oil that’s usually worth less than regular crude. Condensate output has gradually increased as Pemex exploits major onshore fields such as Quesqui and Ixachi.

Production of the company’s Isthmus light crude has also increased, while output of its flagship Maya heavy grade has declined for years.

Pemex had a net loss of 77.2 billion pesos ($3.8 billion) in the quarter, in part due to the impact of exchange rate fluctuations, the company said in an earnings report.

The net loss reported to the stock exchange, using the same criteria adopted by most publicly traded Mexican companies, was narrower at 62.8 billion pesos. That compares with net income of 14.4 billion pesos the previous quarter, and 1.4 billion in the same period a year earlier.

Pemex’s financial debt has edged up 1.6% this year to $113 billion at the end of September.

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