The Mexico’s state owned petroleum company Pemex’s (Petrolleos Mexicanos), oil production goals through the year 2024 are reported to be too optimistic by Fitch Ratings, the credit rating agency.
The report states that if the company achieves its target of 1.7 million barrels per day, there are chances that the production will fall by 6 percent in 2019 when compared with the same period in 2018.
The Fitch analysts have based the finding on the company’s previous records and the expectation of a 5 percent decline every year.
The crude oil production of the company fell from 1.84 million barrels per day in 2018 to 1.66 million barrels per day over the same time period in 2019. Natural gas production also fell by 6 percent in the second quarter of 2019.
The oil production must reach 2.7 million barrels per day in 2024 for the company’s current business plan to be realised, a figure that hasn’t been achieved by Pemex since 2008.
Outside investments could have helped Pemex realise its target. But the company’s plans suggest that it is not looking for any joint ventures.
Pemex is developing 22 onshore and shallow water fields. According to analysts the development of oil fields might help the company with its slow production but might not completely stem production.
The credit matrix of Pemex is also expected to weaken if the company goes through with its business plan. Fitch stated, “We estimate Pemex’s average historical F&D cost per barrel has been about $18/boe, whereas the plan implies single-digit F&D costs in order for it to be proportionate to production targets and 100% or above RRR.”
Pemex stated that the biggest problem it is facing presently is the fiscal burden which the firm intends to reduce through a series of short term measures that are included in the business plan.