Pemex slashes May output below Opec+ commitment

Mexico's state-owned Pemex slashed crude output to 1.53mn b/d in May, some 123,000 b/d lower than the 100,000 b/d cut agreed as part of the Opec+ deal in April.

"As of 30 May, national production reached 1.65mn b/d, 1.53mn b/d corresponds to Pemex," oil regulatory commissioner Sergio Pimentel tweeted yesterday.

Output under contracts awarded following the 2014 energy reform — including independent operators and farm-outs with Pemex — was 125,000 b/d.

Pimentel did not specify how much of the 125,000 b/d was produced by Pemex, but around half of the monthly output from contracts typically comes from Pemex's shallow water Ek-Balam contract that it operates alone. The full results will not be published until 24 June.

In an effort to stabilize global crude prices that have been pounded by declining demand amid the Covid-19 pandemic, the loosely allied group of countries known as Opec+ agreed to cut output by 9.7mn b/d between May and June with reductions gradually scaling down to 5.8mn b/d until conclusion of the deal in April 2022.

Mexico agreed to cut 100,000 b/d in May and June — from a 1.75mn b/d baseline — with the US government agreeing to reduce by an additional 250,000 b/d during that period.

Compliance with May's cuts is being monitored closely prior to Opec and the wider Opec+ meeting set for 9-10 June, although the dates could be brought forward.

Mexico will remain within the Opec+ group but has no plans to further cut production, the energy ministry told Argus previously.

"Mexico's position will have very little impact as the amount of cuts that it agreed to before were not relevant on a global scale," Warren Levy, chief executive of independent operator Jaguar E&P told Argus recently.

"The risk is not involving yourself in those type of multilateral conversations may leave you as an outsider looking in as decisions are being made that could affect the industry substantially going forward," he said.

Pemex has said it would cut production this year — in addition to the Opec+ cuts — as low crude prices have made most output unprofitable but it has yet to announce new targets.

By Rebecca Conan