Mexican oil data supports tenders to boost reserve potential

Mexico’s hydrocarbons regulator CNH has revealed data related to the country’s proved, probable and possible reserves, confirming that the country remains a major oil producer, albeit with declining output. 

“In the case of proved reserves [1P], there was an increase of 4.6%” from 2019 to 2020, said CNH reserves director César Alejandro Mar Alvarez in the Tuesday session of the regulator. “In the case of gas there was a decrease of some 3.8%,” he added.

However, total proved, probable and possible reserves (3P) of oil and gas in 2020 are at just over 23Bboe (billion barrels of oil equivalent), 8% less than the 25.1Bboe estimated in 2019.

Reserves	Oil (Mb)	Gas (Bf3)	Crude oil equivalent (Mb)	% change (19-20)
1P	6,346.8	9,285.6	8,061.9	2.1
2P	12,102.1	20,939.8	15,905.5	0.4
3P	17,726.5	29,703	23,088.2	-8.0

Source: CNH

MIXED PICTURE FOR PEMEX, SUPPORTS TENDERS

While the 2020 figures may be viewed positively compared with 2019, at least by the metrics of 1P and 2P oil reserves, the long-term trend bodes ill for Mexico’s oil and gas future. 

Mexico’s total oil and gas reserves, regardless of the proven, probable or possible metric used, have declined steadily since 2013. 3P reserves have dropped from 44.5Bboe in 2013 to 23.1Bboe in 2020.  

The disclosure is the result of a year-long process whereby operators submit reserve figures, which are then independently assessed and often revised and updated.  

The data validates a long-running view expressed by CNH commissioners that private sector participation through auction rounds is the best way to capitalize on the nation’s potential.

While unassigned oil patches and Pemex assignments saw their 3P reserves decline over the past year, 3P reserves in oil and gas regions that were tendered to operators from 2015-2018 increased by 68% in 2020, due to discoveries and higher revised assessments of potential hydrocarbons.

By contrast, the data paint a mixed picture of Pemex’s oil and gas portfolio. “Koban and Vinik together added 81.9Mboe,” Mar said, referring to the two gas field’s 3P reserves. 

More significantly, the Ixachi field saw an upward revision of 257Mboe to its proved and probable (2P) reserves, and 3P reserves were hiked by 278Mboe. Pemex executives have recently cited Ixachi as part of the firm’s plans to lift output in 2H20. 

However, a slide during the presentation showed a “decrease and adjustments in the estimations of the Priority Camps” as well as “Declination of Mature Camps.” 

The overall size of the markdowns for priority camps, the centerpiece of Pemex’s plan to raise national oil production, was not cited. 

METHODOLOGY

In some cases, “operators normally estimate greater volumes of reserves for some camps,” Mar said, “but in some camps there are cases where the independent third party records a higher estimate than the operators.” 

The figures are based on reserves reported by: Pemex, Hokchi Energy, Eni, Deutsche Erdoel, and Petrolera Cárdenas-Mora. In addition, the following operators reported reserves for the first time in 2020: Fieldwood Energy, Petrofac, Servicios Múltiples de Burgos, DS Servicios Petroleros, Diavaz Offshore, Strata CPB, and Lifting de México. 

CNH aims to keep variability between operator estimates and independent assessment within a range of 10% or 15Mb of oil equivalent for proven reserves, 20% or 50Mboe for proved and probable reserves and 20% or 75Mboe for 3P reserves between operator’s estimates and independent certification. 

However, recorded variations in 2020 do not reflect the need to double the range of error between 1P and 2P estimates. In fact, from 2019 to 2020, Mexico’s 2P reserves increased by 1.3%, while its 2P gas reserves rose by 0.6%. 

In 2020, 3P estimates decreased by 8%, while 1P estimates inched up by 2.1%, both demonstrating a wider range than 2P figures. Moreover, the 2P figures have held steadier over time with regard to both gas and oil.