Pemex production set to fall sharply in Dec-Feb

The production figures of Mexico's state-run oil company Pemex are expected to take a sharp turn for the worse in the first three months of the Andrés Manuel López Obrador administration, possibly falling as low as 1.59Mb/d between December and February, reported daily El Universal.

According to the Pemex end of administration accounting report for 2012-2018, the Ku-Maloob-Zaap field will be producing an average 825,000b/d in December-February 2019, the Chuc field 154,800b/d and the Cantarell field 117,600b/d, representing a total drop of 126,700b/d compared to output in October 2018. These declines would represent a 10.7% drop in production between October and the first three months of the new government, according to El Universal.

Particularly noteworthy is the decline in production from Ku-Maloob-Zaap, since it marks the peak of Mexico's most important field, which in October was still producing 879,100b/d.

This is bad news for the new government as it attempts to maintain calm among the holders of Pemex's massive debt, who have already been spooked by the cancelation of the new Mexico City airport project in Texoco. Ratings agency Moody's also issued a credit negative view in October on the government's announced plans to produce oil primarily for the country's own refining needs.

Pemex will have to pay one third of its US$104bn debt (as of June 2018) in the next three years, meaning that maintaining the company's investment grade is of key importance to the administration, which has admitted that the only way of servicing this debt is through crude production, according to local media.

Pemex's November 2018 production results will be published on December 21, 2019.