Mexico oil reserves dip as private firms start to contribute

Proven oil and gas reserves in Mexico fell again this year as new discoveries failed to keep pace with ongoing production, but officials pointed to the first-ever reserves contributed by private companies operating their own blocks as silver lining.

Overall reserves fell by more than 7% at the start of 2018 compared with a year earlier to total 8.483 billion barrels of crude oil equivalent (boe), according to data published last week by Mexico’s National Hydrocarbons Commission ( CNH ).

The vast majority of Mexico’s proven reserves have been contributed by national oil company Pemex , which enjoyed a decades-long monopoly until a 2013 constitutional reform ended it, paving the way for private producers to enter the sector.

But a relatively small amount of the reserves now reflect discoveries made by private and foreign oil companies.

They include some 251 million boe from two shallow water blocks auctioned in late 2015 to Italy’s Eni and Argentina’s Hokchi Energy , which is backed by British oil major BP .

“What we see here is the first certification of reserves that are being presented by two companies that received contracts at auction,” said Juan Carlos Zepeda , Head of the CNH , as the figures were announced.

He said reserves from the two blocks have tripled since the companies took them over from Pemex.

“That will come later,” he said.

The so-called Zama find made by the Talos-led consortium is estimated to hold more than 1 billion barrels .

The 2018 reserves also reflect Pemex’s onshore Ixachi discovery announced in late 2017 , which added nearly 98 million boe .

Mexico's biggest onshore oil find in 15 years

According to CNH data, the total reserves consist of 6.46 billion barrels of oil as well as 10.02 trillion cubic feet of natural gas .

At the start of last year, proven reserves in Latin America’s second-biggest economy totaled 9.16 billion boe.

Over the past decade, reserves have slid more than 40% as Pemex’s exploration activity yielded fewer discoveries.

The energy reform was designed in large part to reverse years of declining crude output by allowing foreign and private producers to make their own discoveries.

sg