Page 11 - LatAmOil Week 23 2020

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Mexico refuses to extend oil output cuts

MEXICAN President Andres Manuel Lopez had put pressure on the Latin American state
Obrador has said that Mexico is not in a position to accept a reduction of 400,000 bpd. Mexico
to extend oil output cuts and has called for other refused to do so, however, and said that the US
countries to do so instead. had pledged to make up most of the difference.
“We couldn’t do any more. We’ve done our Under the new agreement, OPEC+ mem-
part and you can check that we’re not extracting bers were due to start fading out the cuts in July.
more oil, that there was a reduction of 100,000 However, oil prices have remained persistently
barrels [per day] as we offered” to do at the low in the face of the coronavirus (COVID-19)
last OPEC+ meeting, Obrador said at a news outbreak, and most producers are keen to offer
conference. more support to the market. Mexico, however,
“Now those ... who haven’t done it need to has been reluctant to restrict output levels.
do it,” he was quoted as saying by Reuters. In the The Latin American state’s oil industry has
future, he added, Mexico’s decisions will hinge been hit hard by the pandemic. Mexico’s state oil
on the global economy as well as demand for oil. company Pemex posted a loss of MXN562.13bn
In April, Mexico’s government agreed to ($25.85bn) for the first quarter of the year, down
reduce its crude output as part of an agreement from MXN35.7bn ($1.64bn) in the same period
between OPEC and its allies, led by Russia. This of 2019.
group, which is known as the OPEC+ group of US-based ratings agency Fitch said recently
oil-producing countries, agreed to reduce pro- that Pemex was the “most vulnerable” national
duction by a total of 9.7mn barrels per day in operator among its peers in Latin America. The
May and June. company may need more government support
Under that deal, Mexico was due to lower and higher revenue from its refining business
output by 100,000 bpd in May and June. to withstand the world oil price slide, it com-
Prior to that meeting, the OPEC+ group mented. ™

Pemex reportedly cancels $160mn

worth of oilfield service contracts

MEXICO’S national oil company (NOC) offshore Campeche State, they said.
Pemex has reportedly cancelled contracts with Work on the suspended maintenance pro-
a number of its major suppliers and service pro- grammes is not likely to resume before next Jan-
viders. The move will help the company reduce uary, one source added.
its expenses but is likely to lead to the loss of As of press time, Pemex had not commented
thousands of jobs. on the matter. And when contacted by Bloomb-
Citing unnamed sources with direct knowl- erg, the parent company of Marinsa de Mexico
edge of the matter, Bloomberg reported on June asserted that there had been no change in its
10 that Pemex had suspended multiple contracts dealings with the NOC.
within the last few weeks. The move had affected
eight domestic and international contractors,
the sources said, without identifying all of the
companies involved.
They were speaking after the Reforma news-
paper reported that the NOC had cancelled a
total of 45 contracts worth about $160mn. This
move, which may have eliminated as many as
8,000 jobs, affected a number of offshore service
companies, including Marinsa de Mexico and
Cotemar, Reforma said.
According to Bloomberg’s sources, many of
the invalidated contracts cover maintenance
operations at two offshore fields in the shal-
low-water section of the Gulf of Mexico. One
of the fields affected was Ciudad del Carmen Mexico’s NOC is looking to cut expenses this year (Photo: Pemex)

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