Mexico – what’s happening

One of the best ways to learn how an industry is doing is to talk to people when you are actually around. That’s what happened to me in February, when I was in Mexico for a week. Through the conversations and chats I had during that week, a picture started to emerge of how the oil indus­try is doing in this big country.

Payment delays

One of the most pressing issues in Mexico’s oil and gas industry – this was a recurring theme during the con­versations I had – was the challenges that Pemex is facing. The state-owned company has apparently been unable to pay contractors for a long time, to the extent that many are facing serious financial trouble and are running the risk of going out of business.

I spoke to one service company di­rector who was very serious in his at­tempt to drum up business abroad to become less dependent on work com­ing in from Pemex. But he also admit­ted that it will be very difficult to do so in the current environment, where drilling is not at a global high.

What is the explanation for Pemex’s inability to pay its contractors? I guess there are multiple reasons for that, but what I heard was that the government takes too much of a cut, and that Pemex has been ignored since the country opened up to foreign investment in 2016. At the time, the hope was that the newcomers would take care of find­ing the new volumes the government was craving for, leaving Pemex in the shadows. I think this is not necessarily how the situation has unfolded, with companies slowly turning their backs on Mexico again recently.

Still an important player

At the same time, Pemex is still by far the most important player in the country. Many people, especially in the Villahermosa area in the south of the country, have family members who either work for the company or did so in the past. The perks of work­ing for Pemex were very good; going back some years, it was even possible to nominate a family member as a suc­cessor to your role if you retired from the company. Things have become less attractive over the years, on the back of the situation sketched above, but it is clear that Pemex is still a major force.

As such, it is also Pemex that is cur­rently exploring for additional resources. Commissioned by Pemex, Sinopec is in the process of acquiring a large 3D seismic survey onshore Tabasco – in the Villahermosa area – to map deeper pros­pects beneath the main oil and gas fair­way in Miocene deep-water sands. There is hope that deeper Cretaceous and Ju­rassic strata at depths of 3-6 km may hold further potential. The acquisition is not an easy task; the lowlands of Tabasco are characterised by wet and swampy ar­eas where access is problematic.

Pemex is also drilling exploration wells in the area already. Just recent­ly, well Krem 1-XP experienced a blow-out whilst targeting Cretaceous reservoirs in the Las Choapas area in Tabasco. It was the first well of a four-well campaign in the area.