Minister Says PEMEX Must Invest US$40bn in Exploration by 2015
Schlumberger | Minister Says PEMEX Must Invest US$40bn in Exploration by 2015
Fri, Oct 28, 2005 21:30 GMT
MEXICO CITY - Mexico's state-owned oil company Pemex needs to invest US$40bn in exploration over the next 10 years to reach a reserve replacement rate of 100% by 2015, energy minister Fernando Canales told businesspeople at an industry event in Veracruz.
Mexico's reserve replacement rate is currently about 57% compared to only 27% at the beginning of President Fox's administration in 2000, Canales said.
The annual incorporation of new proven reserves increased to 916 million barrels (Mb) in 2004 from 216Mb in 2001 due to Pemex's E&P investments of US$11bn in 2004, Pemex CEO Luis Ramírez Corzo said in a separate statement.
However, former energy minister Fernando Elizondo said in May that Mexico needs to invest US$15bn a year in oil E&P to maintain its level of reserves and avoid becoming a net oil importer in the next 20 years.
Pemex investments have identified total potential reserves of 54 billion barrels (Bb) of crude compared to the current level of 47Bb of proven reserves, "which substantially strengthens the outlook for Pemex in terms of production and transformation of hydrocarbons in the long term," according to Ramírez.
Of Pemex's current proved crude reserves, almost 30Bb are in the Gulf of Mexico and 18Bb in the country's southeastern region, he said.
Pemex's crude output has increased an average 389,000 barrels a day in the period 2000-2005, a 13% increase.
The incremental crude production output in the last four years associated with additional investments is thus about 2Bb, Ramírez added.
Despite Ramírez's positive spin on Pemex's investments and production in the last four years, Canales warned that hydrocarbons production has peaked, not only in Mexico but also in the world as a whole and will start to decline.
Mexico's oil wealth has not become a motor for the country's development as one third of revenues from crude sales are used for public expenditure instead of being invested by Pemex in E&P projects, Canales said.
Canales and Ramírez are both in favor of opening the Mexican energy sector to private investment to complement public participation in oil and gas projects, but this politically delicate issue is likely to be shelved until after national elections in July 2006.
Mexico's chamber of deputies recently approved a Pemex fiscal reform bill that will free up some US$2bn a year for the company to invest in new projects and both Ramírez and Canales expressed their confidence that senators will approve the bill in the coming days.
However, the amount of money Pemex will save from the tax reform is really "just a drop in the bucket" compared to the US$10bn-15bn a year the company needs to invest in E&P going forward, an analyst told BNamericas on the sidelines of the IBC/BNamericas Energy Integration Congress held in Santiago, Chile from October 24-26.
The main issue for Pemex is finding new financing sources for its investments as it has overused the Pidiregas public infrastructure-financing scheme and its tax burden remains high, the analyst said.
Fri, Oct 28, 2005 21:30 GMT
MEXICO CITY - Mexico's state-owned oil company Pemex needs to invest US$40bn in exploration over the next 10 years to reach a reserve replacement rate of 100% by 2015, energy minister Fernando Canales told businesspeople at an industry event in Veracruz.
Mexico's reserve replacement rate is currently about 57% compared to only 27% at the beginning of President Fox's administration in 2000, Canales said.
The annual incorporation of new proven reserves increased to 916 million barrels (Mb) in 2004 from 216Mb in 2001 due to Pemex's E&P investments of US$11bn in 2004, Pemex CEO Luis Ramírez Corzo said in a separate statement.
However, former energy minister Fernando Elizondo said in May that Mexico needs to invest US$15bn a year in oil E&P to maintain its level of reserves and avoid becoming a net oil importer in the next 20 years.
Pemex investments have identified total potential reserves of 54 billion barrels (Bb) of crude compared to the current level of 47Bb of proven reserves, "which substantially strengthens the outlook for Pemex in terms of production and transformation of hydrocarbons in the long term," according to Ramírez.
Of Pemex's current proved crude reserves, almost 30Bb are in the Gulf of Mexico and 18Bb in the country's southeastern region, he said.
Pemex's crude output has increased an average 389,000 barrels a day in the period 2000-2005, a 13% increase.
The incremental crude production output in the last four years associated with additional investments is thus about 2Bb, Ramírez added.
Despite Ramírez's positive spin on Pemex's investments and production in the last four years, Canales warned that hydrocarbons production has peaked, not only in Mexico but also in the world as a whole and will start to decline.
Mexico's oil wealth has not become a motor for the country's development as one third of revenues from crude sales are used for public expenditure instead of being invested by Pemex in E&P projects, Canales said.
Canales and Ramírez are both in favor of opening the Mexican energy sector to private investment to complement public participation in oil and gas projects, but this politically delicate issue is likely to be shelved until after national elections in July 2006.
Mexico's chamber of deputies recently approved a Pemex fiscal reform bill that will free up some US$2bn a year for the company to invest in new projects and both Ramírez and Canales expressed their confidence that senators will approve the bill in the coming days.
However, the amount of money Pemex will save from the tax reform is really "just a drop in the bucket" compared to the US$10bn-15bn a year the company needs to invest in E&P going forward, an analyst told BNamericas on the sidelines of the IBC/BNamericas Energy Integration Congress held in Santiago, Chile from October 24-26.
The main issue for Pemex is finding new financing sources for its investments as it has overused the Pidiregas public infrastructure-financing scheme and its tax burden remains high, the analyst said.
posted by Marcel at 2:29 PM
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