NORTH AMERICA REPORT
Dev George
Managing Editor - International
Pemex (Petroleos de Mexico), pressed between the Mexican constitution's prohibition of private involvement in the petroleum industry, and the economic and energy needs of the country, has never been a bastion of efficiency, but has put Mexico among the world's oil exporters. Now, however, it is faced with the necessity of significantly boosting both national production and exports, but without the funds to do so.
At an oil industry public forum held in April in Ciudad del Carmen, Pemex did its best to persuade its own officers, government officials, and private companies that it was capable of either prolonging current production levels or even increasing them, but that it needed equally prolonged investment of the funds to do so.
Defending Pemex's position, Raul Gonzalez, Pemex's deputy director of exploration, assured attendees that the state oil company has an advantage over other potential operators because it can discover reserves at costs and with risks that are much lower than they would face. This due to the geological conditions encountered in the country's offshore province. The US CIA differs on the company's capabilities and has returned a pessimistic report on Mexico's ability to repay its US$20 billion debt via export revenues.
Pemex's Energy Secretary Ignacio Pichardo has revealed production of 2.665 million b/d in the first two months of this year, with exports averaging 1.240 b/d during that period. He maintains that at current levels of activity, Pemex could add further to the level of exports by producing another 100,000 b/d by the end of the year, with all new production pegged for export.
Serrano to the rescue
Mexico has at least one other card up its sleeve, however: the vast, newly identified Tabasco littoral province, with its large but yet to be determined reserves, which Pichardo disclosed in March of this year. The province consists of at least ten fields and lies between the onshore Chiapas-Tabasco area and Campeche Sound. The area, relatively shallow, is located in the Grijalva River estuary off the Tabasco coast, near the town of Frontera.
According to Pemex Exploration & Production Director-General Jose Antonio Ceballos, three discovery wells have been drilled in the area so far: Bolontiku 1, Hayabil 1, and Sinan 201. Each flowed extra-light crude ranging in gravity from 35 to 46, with considerable associated gas. The first, Bolontiku, lies in only 25 meters of water just 12 km from shore; the second, Hayabil, is just 10 km south of Bolontiku; and the third, Sinan 201, lies 44 km offshore in 45 meters water. Test flow from Sinan was 5,000 b/d at 35 gravity.
Although it was known Pemex was working in the area, the company had refused to provide any information about its activities there until Pichardo's statement. At the Carmen public forum, ex-Pemex chief Jorge Diaz Serrano, now head of the Mexican private sector group Serbo, sprang back into the limelight with a dramatic proposal to rescue Pemex, the Mexican petroleum industry, and the nation - an offer to foot the bill for development of the Tabasco littoral province with initial capital investment of from US$300 million to over $1 billion.
Serrano maintains he can raise Pemex's production by at least 500,000 b/d via a turnkey four-year development program that would drill 100 development wells over the period of the contract, and provide all the material, equipment, personnel, technology, and infrastructure required to bring the Tabasco littoral into full production. This with the services of specialized private contractors and all fully in accordance with the Mexican constitution.
Serrano was the first Pemex director-general to bring in private sector activities on a contract basis, and was the leading force behind the company's development of its huge Campeche Sound province. Under his leadership, the state monopoly transformed Mexico from a net importer to one of the world's top producers. He was later convicted of kickbacks and corruption, and imprisoned for five years. No one, however, doubts his engineering acumen and entrepreneurial sagacity.
Pemex neither accepted nor rejected Serrano's offer at the Carmen forum. Adrian Lajous, Pemex's current director-general, had no comment.
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