Pemex Sees Solid Results as Mexico Ups Domestic Oil

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Researched by Amir Richani for Industrial Info Resources (Sugar Land, Texas)--Petroleos Mexicanos (Pemex) (Mexico City, Mexico) notched up significant gains in revenues and profits for the second quarter of 2022, as the company readies to open a new refinery. Since the beginning of his tenure, Mexican President Andres Manuel Lopez Obrador has been adamant about strengthening state companies and achieving energy independence through domestic production, which influenced Pemex's decision to add a refinery.

The latest financial and operational figures offer Pemex a positive scenario, following the impact of the global pandemic on the energy industry.

Pemex expects to expand its domestic refining capacity by 340,000 barrels per day (BBL/d) with the opening of the new Dos Bocas Refinery in the state of Tabasco, fueled by support from Lopez Obrador. But even with the hike in crude processing rates seen in the last few months, Mexico's fuel imports in the second quarter averaged more than 730,000 BBL/d, according to Mexico's energy ministry. Gasoline, for its part, represented more than half of total fuel imports, demonstrating that Lopez Obrador's goal remains far from realization.

Pemex reported second-quarter net income of 131 billion pesos (US$6.4 billion), an 814.6% jump from the same period in 2021. This represents the second time in the last five years that Pemex reported a second quarter with positive net income, following the losses registered in 2018, 2019 and 2020. These financial changes are attributed partly to geopolitical changes that have propped up energy prices.

Meanwhile, Pemex's total sales for the second quarter jumped 88.6% from the second quarter of 2021. The stronger sales resulted from an 89.2% increase in domestic sales from higher fuel prices, and an 88.5% increase in export sales due to higher prices for the Mexican crude mix. The company's debt remained stable at US$108.1 billion.

Besides positive financial results, Pemex published higher downstream rates, with crude processing standing at 796,000 BBL/d of oil in the second quarter, accounting for a 130,000-BBL/d increase when compared with the same quarter last year, but about 3.1% lower than the first quarter of 2022. However, despite the higher volumes, Pemex only utilized some 48.6% of the company's Mexican domestic 1.64 million-BBL/d refining capacity.

Oil and Natural Gas Production
In the second-quarter report, Pemex declared a total oil output of 1.79 million BBL/d (including condensates and Pemex's partners), signifying a 1.1% increase when compared with the same period last year. Meanwhile, natural gas production stood at 4.72 million cubic feet per day, accounting for 0.4% more than in the second quarter of 2021. The higher oil output volumes are mainly the result of new oil wells across several of Pemex's fields.

Pemex mainly produces Maya heavy sour crude, which accounted for more than half of the total output in the latest report. Heavy sour crude volumes have dropped over the last few months due to the natural decline of the Ku-Maloob-Zaap oil complex, Mexico's largest producing field. On the other hand, light crude and condensate volumes saw a spike of 160,000 BBL/d when compared with the second quarter of 2021.

Since coming to power in 2018, Lopez Obrador has aimed to increase Pemex's oil and gas production, though he has yet to achieve the goals set by his administration. However, in recent years, Pemex has halted oil output declines and has maintained the production of oil and condensates near the 1.75 million-BBL/d level.

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