Pemex sees Maya crude as low as US$19/barrel by end-March

Mexican state oil company Pemex expects its top-selling Maya heavy crude oil to fall as low as US$19 per barrel by the end of March, an internal document seen by Reuters shows, further complicating its efforts to stem a decade-long output slump.

The possibility that Pemex's main export grade could dip below US$20 per barrel comes as the ailing company plans another round of steep budget cuts which the new CEO has been tasked with implementing.

Further pressure on its declining revenue from even lower prices would hamper Pemex's ability to compete with private sector rivals, who are entering the Mexican oil patch for the first time in decades after a major sector overhaul.

Pemex has posted a dozen consecutive quarterly losses, including a record US$10 billion loss in the third quarter of 2015. This year, the company's total debt is set to exceed US$100 billion.

Maya crude made up nearly three-quarters of Pemex's total oil exports last year. On Friday, Maya shipments to the United States were trading near US$24 a barrel.

What the document termed the "pessimistic yet plausible forecast" assumes that the value of international benchmark Brent, which has historically moved in tandem with the value of Maya, will continue to drop over the same time.

Maya trades at a discount to Brent due to factors that make it harder to process, including its relatively high sulfur content and its low API gravity.

At the top end of the Pemex forecast, Maya will trade no higher than US$25 per barrel by the end of March.

At the lower end, the value of Maya crude would be well below the production costs of only the country's cheapest, shallow-water developments, according to the document.

Last month, however, Pemex said in a press release that the average production costs in its currently producing projects are less than US$10 per barrel.

Over the past five years, Maya has traded at an average of about US$11 less per barrel than Brent, according to the document. But the differential between the two in February is about US$7 per barrel, which Pemex sees as the relative strength of Maya, on the back of strong differentials versus lighter crudes.

The shale oil boom in the United States over the past several years has eased the relative scarcity of light crudes, which has put heavy crudes like Maya in a stronger position, the document added.

Mexico's overall crude export mix, a weighted average of Maya as well as Pemex's two lighter grades Olmeca and Isthmus, traded at around US$22 per barrel on Friday.