AMLO's government to reactivate 973 oil wells

Andrés Manuel López Obrador

's government can use 973 closed oil wells in ground assets in Chiapas, Tabasco, Tamaulipas, and Veracruz , that have exploitation possibilities and that have “an important reserve” and have the proper mechanical conditions to be reactivated and put into production.

This will be part of the strategy to reactive the oil production that the President will present next Saturday.

According to information provided by Pemex , in 2004, the oil company extracted 3.4 million barrels per day. In October 2018 it only produced 1.7 million.

López Obrador's government

looks to extract 2.4 million barrels per day by 2024, by the end of his presidency.

The inventory

The information received by Pemex's director, Octavio Romero , refers that the inventory of closed wells available with exploitation possibilities was of 1196 by September 2016, but the previous administration tendered the reactivation contracts of 223 wells, with the investment and execution capacity through third parties, under an available cash flow payment scheme .

In a report of the results of said tender , it's claimed that they were tendered for “not representing a business for Pemex ”, and some of them will be exploited on the short term, at least, a possible remaining reserve of 28 millions of barrels per day equivalent between 2017 and 2023.

The payment scheme is by rate, resulting from the cash flow that results from the income obtained by the commercialization of the production, which was allocated to Alpha Energy, Inc. and Tavies Excavaciones , who participated jointly; and to the consortium formed by Química Apollo, Especialización Profesional de Personal, Recursos Omega, Sistemas Integrales de Compresión, and Geolis , companies that obtained contracts on May 2018.

The scheme was proposed because “for some years and until today, Pemex has been facing a decrease in the production of approximately 300,000 barrels per day and an increase in the decrease factor, because no new important oil field discoveries have been made in the country, and that almost 70% of the fuel produced comes from mature camps that have been exploited for over 30 years.”

Evaluating the scheme

The new government will decide if the reactivation of these wells is made by Pemex or through the same scheme used by the previous administration.

The reactivation and maintenance of closed wells began last year focused on the development and exploitation of the oil and gas reserves , with the purpose of securing the supply of crude petroleum, natural gas , and oil products demanded by the country.

The new administration will obtain the benefits, as an extraction of 18.86 thousand barrels per day is expected and 39.4 million daily cubic feet, associated to the activities to reactivate and maintain the production in those 223 wells.

The new Pemex directo r was informed that the project is valued at USD $1,023 million , that results from the profits generated by the sale of the fuel produced through the extraction of the 2P reserve, which would generate USD $532 million in rights and taxes for the public treasury.

Even when they don't have the information in regards to the periodic evaluations or the performance indicators of the reactivation tasks that began in August, it represents an opportunity to develop the 973 remaining wells in the same conditions.

PEMEX predicts 10.7% decrease in oil extraction in the next 3 months

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