Mexico’s state oil firm Pemex plans to pursue an ultra-deepwater project in the Gulf of Mexico despite limited resources and despite recent pledges to avoid riskier endeavors in which it lacks experience.
Mexico’s energy regulator, the National Hydrocarbons Commission CNH, has recently approved a plan by Pemex to drill for oil in ultra deep waters in the Gulf of Mexico, Reuters reported on Wednesday, quoting a filing with CNH.
Just two weeks ago, Pemex’s chief financial officer Alberto Velazquez said that the state oil firm would avoid investing in deepwater projects, instead focusing on areas where it has experience, including the shallow waters of the Gulf of Mexico and onshore fields.
Yet, according to the drilling and exploration plan approved by CNH, Pemex plans to invest US$106 million in four years exploring in the Perdido area, which is a prolific producing basin on the U.S. side of the maritime border. Actual drilling is set for Q2 2021, according to the plan seen by Reuters.
Even if Pemex were to find oil in its deepwater drilling project, it would certainly need an experienced external partner to help with the complexities of deepwater development, CNH commissioner Alma American Porres told Reuters.
However, CNH canceled an auction last month to pick foreign partners for Pemex scheduled for October as the populist left-wing Mexican President Andrés Manuel López Obrador is seeking a greater role for Pemex in reversing the downward trend in Mexican oil production.
López Obrador is criticizing the energy reform of his predecessor Enrique Peña Nieto—who opened in 2013 Mexico’s oil and gas sector to private investment for the first time in seven decades—and the foreign oil firms for failing to do so.
Yet, analysts and credit rating agencies doubt that Mexico will succeed reversing its oil production decline by entrusting this effort to the most indebted oil company in the world, which the government continues to support with tax rate cuts and tax breaks, but which weighs on the government’s finances because of its deteriorating credit profile.