Strategic Considerations: Pemex’s crude output could be around 1.5m barrels of oil per day by the
end of the year due to the company’s financial situation and the depletion of the Ku-Maloob-
Zaap fields. Since the company has been reducing investments in exploration and production, it will
be a challenge for Pemex to increase output from other wells.
- Maloob hit a six-year record low in July
- Data on Ku-Maloob-Zaap’s exploited reserves show that this group of fields would need more
investment to restore its output to former levels
Pemex budgetary cuts of MXN 40.5bn (USD 1.86bn at today’s exchange rate) announced in April will
be a barrier for the company to recover its pre-pandemic levels of oil production as its most
important group of fields are in decline, two analysts and a consultant said.
In July, the Mexican state-owned oil company produced the lowest level of oil in almost 40 years:
1.56m barrels per day (bpd) — accounting for barrels produced by Pemex in fields in which it is the
operator and also in partnerships.
The company has seen a decrease in production since April, when it agreed with OPEC to cut output
by 100,000 bpd. But Pemex is also seeing a decline in production as the output in its biggest field,
Maloob, is steadily going down since last year, they said.
“We have seen an accelerated decline in Maloob field since the beginning of the year. With these
numbers we expect to close the year around the 1.5m bpd,” said Layla Vargas, CEO of Muvoil
Maloob, which reached peak of production in April 2018 at 458,000 bpd, is now at 2014 levels. The
field was considered the most important one for Pemex but last month, its production declined by
122,000 bpd YoY, according to data from energy regulator CNH. The figure is higher than the 90,000
bpd decline anticipated by Pemex on 28 June.
Maloob and adjacent fields Ku and Zaap are in depletion, or decline, said the analyst. “Maloob has
around 62% of its original reserves already exploited, Ku 90% of reserves exploited and Zaap, 75%,”
the analyst added. “Pemex would need to invest in a very aggressive plan to implement
recovery technics, but the company cannot do that, given its financial situation.”
Pemex’s oil production is still going to decline this year and it could end at around 1.2m bpd by 2025,
said the analyst.
The state-owned company does not have any upcoming projects that could offset the loss in
production from its largest fields, said the first two analysts and a third one. In addition, the plan for
priority fields has no solution for this problem, they added.
“Of those 20 priority fields that Pemex announced in 2019 it would invest to increase production,
there are just two or three that are actually giving decent results,” said Jorge Sierra, an independent
“I do not expect those fields to produce more than 150,000 bpd, with a peak that will last around just
two years, followed by a fast decline in production,” said Vargas.
In 2020, Pemex has also shown poor results in exploration, with just two new wells successfully
operating out of seven that were drilled this year, he added.
The Agreement will be published in the Official Gazette.
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