Mexico City May 5th, 2024.
Petróleos Mexicanos (“PEMEX”) currently holds around 300 oil fields, on which approximately 25% possible and probable reserves, known as 2P reserves, are encountered. Studies indicate that the probability of extracting oil from the aforementioned fields is between 10% and 50%. In accordance with the National Hydrocarbons Commission, 2P reserves hold the potential to produce up to 2.6 billion barrels of oil equivalent, which represent 15% of PEMEX’s total value. Recently, various forums have suggested that allowing private participation in oil production for these fields could increase the production of the Mexican state-owned company.
Thus, by allowing private investment in 300 of its oil fields, PEMEX could receive the necessary resources to extract the possible and probable reserves. Furthermore, 2P reserves could generate up to $164 billion USD, which would be challenging to obtain with the usage of PEMEX’s current resources.
With the contribution of both technology and investment from the private sector, oil production would increase and consequently generate royalties, which could reach a recovery factor of up to 60%. This percentage would result in reserves of up to 6.7 billion barrels of crude oil equivalent, compared to the 1.3 million barrels of crude oil that PEMEX could produce as of today.
Amongst the competitive advantages of allowing participation of private investment, two main reasons stand out:
- PEMEX’s current budget could be destined towards other more productive fields; and
- Oil companies would invest in producing fields that hold a higher probability of success.
Several sources indicate the possibility that, in the near future, PEMEX will allow private participation in the extraction of 2P reserves, which would represent a development opportunity for the sector.
The attorneys of Basham´s Energy practice remain available to answer questions or provide comments.
Sincerely,
Juan Carlos Serra
Lic. Pablo Nosti
Lic. Pamela Salas
Iván Sánchez López
