Pemex’s CEO José Antonio González Anaya shared his reflections on his first year in the state-owned firm’s top job at this year’s CERAWeek by IHS Markit, saying that some of his policies and attempts to reduce Pemex’s serious debt have not made him a popular person.
“The first thing is to recognize that we had a major problem,” he told the CERAWeek audience on Tuesday. “And, we very quickly – within a few weeks – determined that we needed to cut (MEX) 100 billion (US$5 billion) off our budget.
"The way to make sure that that didn’t hurt our future prospects for production, was to try and use the tools of the energy reform. The best example is Trión – we cut it in April and it is back online today. We are trying to do some of that in our other projects,” he said, in reference to pursuing partnerships in the refining sector.
Moderator Carlos Pascual, senior vice president of Global Energy for IHS Markit, asked González about Mexico’s falling oil production, and ongoing efforts to combat it.
“To put into perspective, in 2004, we produced 3.4 MMb/d, of which 2.1 MMb/d came from Cantarell (Mexico’s famed, prolific shallow water field),” González said. “Now it produces 200,000 b/d. Indeed, Pemex’s production has fallen, but the good news is non-Cantarell production has increased 54% in the same time period to 700,000 b/d, which is near Ecopetrol’s total production in Colombia. [Editor's note: Ecopetrol's Q4 2016 earnings report shows an average annual production of 718,000 boe/d.]
“I like to look at it optimistically,” he continued. “This means that our exploration and production investment has gone from (MEX) 50 billion ($2.5 billion) in 2004 to (MEX) 300 billion ($15.3 billion) today.”
Pascual asked González for his perspective on the upcoming 2018 presidential election in Mexico. He reassured the crowd that whoever comes in to succeed current President Enrique Pena Nieto, the energy reform is here to stay.
"It's hard to move the clock back on the energy reform," he said, detailing that it takes a two-thirds majority to make changes to the country's constitution.
"The way I see my job is to make the new environment part of everyday business in Pemex," he said. "I go back to Trion – when someone comes in (after him) and says they don’t want to do a farm-out – they will find it very hard to develop deepwater fields. The fact that we aleady did it, makes it easier to become part of every day life."
He continued: "In this short peiod of time, we can make it part of the way Pemex does business. You can’t go back (to pre-energy reform days) and a new person could stall, but we're making it part of [the way we do] business."
Trión
González, during his session with Pascual, commented on Pemex’s first-ever farm-out on the Trión discovery, with Australian firm BHP Billiton, saying that the project is significant. “A $10 billion project in Mexico… We haven’t spent that on one project before,” he told the CERAWeek audience.
Later on Tuesday afternoon, González joined BHP Billiton’s Steve Pastor, President Operations Petroleum (pictured right), for a press conference on the pair’s new partnership at the Trión discovery. The two companies are very much in the honeymoon phase of the partnership, each singing the other's praise, just a few days after signing a contract confirming their development plans for Trión.
Pastor called the chance to partner with Pemex a “historic opportunity.”
“We have a strong, positive outlook on the oil markets,” Pastor said. “Mexico has established, competitive, attractive, stable fiscal terms.
“I am convinced that this will be one of the best joint venture partnerships across oil companies,” he continued. “Not only what BHP Billiton brings, but the opportunity to leverage best practice between Pemex and BHP Billiton will set us up for extraordinary success.”
González said: “We are very happy and flattered to be partnered with BHP on this endeavor. For Pemex this is a historic milestone. For 80 years, Pemex never had a partner with whom we shared risk, equity, and upside on a project. For us to have our first partner in such an important project – Trión is a field that has 500 MMbbl of 3P reserves. It is close to the US border, and it will require an enormous investment over the next 20 years. For us to do this, and align us with best practice, the way all the oil and gas companies of the world do, it is a tremendous milestone.”
Photos from OE Staff
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