Pemex says new crude finds hold 180mn bl: Update

Pemex's two new crude discoveries in shallow waters in the southeast basin of the Gulf of Mexico hold 180mn bl of oil equivalent in possible reserves, the Mexican state-owned company said today.

The Manik 101A and Mulach 1 discoveries are "a good platform to reverse declining production ... and will start production by the third quarter of 2020," Pemex chief executive Carlos Trevino said.

The Mulach 1 discovery, located 17km (11mi) from Paraiso, Tabasco, in shallow waters at a depth of 21m (69 ft), is expected to produce between 20,000b/d and 30,000 b/d. It contains "super light crude, above 78°API," Javier Hinojosa, director of exploration and production, told Argus.

Liquid hydrocarbons with an API of above 50° are typically considered to be condensates.

The Manik 101A discovery, located 102km from Ciudad del Carmen, Campeche, in shallow waters at a depth of 90m, is expected to produce between 10,000 b/d and 15,000 b/d of light crude. Manik's reserves are estimated at a gravity of 20°API. Mexico's heavy sour Maya crude has a gravity of 22 API°and 3.3pc sulfur.

"The two new discoveries are among the most important shallow-water discoveries in the world over the past fifteen years," energy minister Joaquin Coldwell said during the event.

Yet the size of the discoveries pale in comparison to the Zama 1 discovery with estimated reserves of 1.8bn bl of oil announced last year by Talos Energy in nearby shallow waters.

The discovery well, known as Zama 1, contained light oil with API gravities ranging 28° to 30°.

Talos Energy, together with Sierra Oil and Gas and Premier Oil, won development rights for the shallow water block 2 and block 7 in the first round of tenders overseen by oil regulator CNH. Both blocks are located in the southeast basin, a proven hydrocarbon province in shallow waters off the Veracruz and Tabasco states. Block 2, north of Coatzacoalcos, and block 7, north of Comalcalco contain numerous prospects in well-established and emerging plays.

Development of the Pemex discoveries will fall to the incoming administration "under the schemes that they are proposing," Hinojosa said, without elaborating further.

President-elect Andres Manuel Lopez Obrador will take office on 1 December and has set his sights on "rescuing Pemex" and increasing oil production to 2.6mn b/d by the end of his term in 2024.

Mexican crude production dropped 29pc to 1.8mn b/d in August this year from 2.54mn b/d in all of 2012, according to the latest information from Pemex.

Together with the new discoveries, a further four fields — in the process of delimitation and moving towards production — "have the potential to contribute up to 210,000 b/d of oil and 350mn cf/d of gas to Pemex production," Trevino said today.

Trevino said all six fields should be in production by the third or fourth quarter of 2020.

Pemex is working to start production in the Esah and Xikin fields, discovered in 2015, to add an additional 360mn bl of crude oil equivalent to national reserves, said Trevino.

The Xikin field, 31km from Paraiso in shallow waters at a depth of 24km, is expected to produce 70,000 b/d of oil and 91mn cf/d of gas. The field is near existing Pemex infrastructure, allowing production to start in 2019.

"It is light crude, the type of crude that we most need in our refineries," Trevino said.

The Esah 1 field, located 94km from Ciudad del Carmen in shallow waters at a depth of 67m is expected to produce 23,000 b/d of oil and 9mn cf/d of gas. Pemex expects production to start in March 2020.

Meanwhile, the Kinbe and Koban fields, discovered in 2011 and 2016, are currently in the process of delimitation and would add 325mn bl of crude oil equivalent in 3P reserves, said Trevino.

The Kinbe field, located 28km from Frontera, Tabasco, in shallow waters at a depth of 21 meters, produced around 5,000 b/d of oil during production testing and is expected to produce 24,000 b/d of oil and 35mn cf/d of gas.

The Koban field, located 4km from Frontera, in shallow waters at a depth of 11m is expected to produce 46,000 b/d of oil and 219mn cf/d of gas.

Pemex said it will carry out and finance the delimitation and start of production in all four fields, with the "heaviest investments" required in Esah and Xikin, Hinojosa said. Pemex plans to invest around $50mn in drilling 20 wells in Esah and Xikin and up to $150mn in the construction of two drilling platforms.