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Mexico backs nine-month extension of oil output cuts

24 May 2017 19:04 (+01:00 GMT)
Mexico backs nine-month extension of oil output cuts

Mexico City, 24 May (Argus) — Mexico says it supports an Opec and non-Opec agreement to extend production restraints for a further nine months, even as the country steps up licensing of acreage formerly reserved for the state.

Mexico will again support efforts to cut production along with other oil-producing countries, cutting output by up to 100,000 b/d in the next nine months, based on the managed natural decline of its production, energy secretary Pedro Joaquin Coldwell said in a statement issued after a Mexico City event yesterday.

Coldwell said Mexico supported efforts made by Opec and non-Opec countries to normalize the crude market and reach more stable and predictable prices, in order to allow companies to better plan and administer their investment portfolios.

At the same event yesterday, Coldwell said Mexico is looking at expanding upstream auctions before the current administration winds down in July 2018, in a bid to increase production and reserves.

The energy ministry and Mexico's oil regulator CNH say they are working together to identify new blocks that could be offered in future tenders.

Mexico has vowed to reverse a decline in crude production – continuous since 2004 – by the end of the decade at the latest. The country is a key non-Opec supplier.

In what remains of the current administration, there will be three more tenders: two for deepwater and unconventional areas, and one for shallow-water and onshore blocks, Coldwell said.

The unconventional offering will be the first since a 2014 energy reform that ended state-owned Pemex's monopoly.

Coldwell said the ministry backed a request approved yesterday by the CNH to award Pemex a new exploration block in the deep waters of the Gulf of Mexico, which it could use to increase the size of a recently announced Nobilis-Maximino farm-out. The block was initially earmarked for auction.

In March, the latest available data, Pemex produced 2.018mn b/d of crude, broadly similar to the previous month of February, but still 9pc less than a year ago.