Exclusive: Mexico’s Pemex destroyed resources worth $342 million from two top fields

MEXICO CITY, Jan 18 (Reuters) – Mexican oil company Pemex illegally burned hydrocarbon resources worth more than $342 million in the three years to August 2022 at two key sites, internal documents from the regulator show. of the country’s oil.

Three documents, produced by the director and dated August 2022, detail Pemex (PEMX.UL) destroyed facilities worth $275 million from the Ixachi field in three years and $67 million from the Quesqui field in two years.

To calculate the price, the regulator used prices from non-public contractors to sell those hydrocarbons.

Neither Pemex nor the energy service responded to requests for comment.

At the end of last year, Pemex said it would stop the burning of the fire in Ixachi after reports by Reuters about the violation of the development plan in two fields and related penalties.

Under pressure to meet ambitious production targets by Mexican President Andres Manuel Lopez Obrador, he has been repeatedly accused by the oil executive of breaking his promises to develop the Ixachi and Quesqui fields.

The plans, for the exploration and production of natural gas and other hydrocarbons in the southeastern areas of Veracruz and Tabasco, were approved by the director – responsible for ensuring compliance.

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The burning of gas and condensate – a mixture of liquid hydrocarbons similar to very light crude oil – has also led to significant environmental damage.

Reuters reported last year that Pemex was flaring a lot of gas throughout the region, but the cost of the destruction was not previously disclosed.

Mexico – the eighth largest gas producer in the world – is under increasing pressure, including from the United States, to reduce the practice and emissions of methane.

Controlling emissions is set to become more challenging as sectors age and the world’s most indebted oil company lacks sufficient funds to upgrade ailing infrastructure.

In Ixachi, the destruction was very surprising because the production started a year earlier. There, documents show Pemex flared about 62.9 billion cubic feet of gas and 310,000 barrels of condensate.

That is equivalent to 31% of the total value of gas produced in the field, and 1.3% of the total condensate, according to Reuters calculations.

The documents were sent to the country’s energy minister, Rocio Nahle, head of regulatory compliance at Pemex’s exploration and production arm, and senior officials at the regulator and the interior minister.

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LOST PROVISIONS

Pemex produced 201.2 billion cubic feet of gas and 24.3 million barrels of condensate from Ixachi. But it again failed in its objectives.

The documents also show that 77.6% of the investment in the field of Pemex that was held in its development plan – a total of $ 2.9 billion – has not been done.

Lopez Obrador announced early in his presidency that Ixachi and Quesqui are part of 17 key regions that are expected to dramatically increase national productivity as part of a broader effort to make the country energy independent.

The fields were designed to receive more resources so that Pemex could start exploration and production earlier and faster and make the production drop from aging fields elsewhere.

But Pemex has failed to complete the wells, pipelines and other infrastructure needed to produce gas and condensate from the fields without high levels of waste.

In Ixachi, the destruction of the value of condensate burning was more than 21 billion in three years; in Quesqui, it was nearly $8 million over two years, documents show.

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It was not previously reported that the condensate was burned in the fields. Under Mexican law, documents surrounding the crime are not made public.

“The goal should be to maximize the use of all hydrocarbon products in the field,” one of the documents said, adding that “(Pemex) is not meeting the production it has committed to because the wells and infrastructure are not there”.

In the documents, the director also recommends changes so that Pemex “avoid burning and destroying the market price of hydrocarbon products.”

Pemex has historically taken investments in infrastructure to explore and produce expensive gas and instead imports most of it into the United States.

In recent years, it has come under pressure due to environmental damage associated with gas flaring.

Late last year, Pemex admitted in its revised business plan for 2023 to 2027 that its poor environmental, social and governance (ESG) record risked hurting its finances as competitors shifted rapidly to clean energy.

Reporting by Stefanie Eschenbacher Editing by Stephen Eisenhammer and Lisa Shumaker

Our standards: The Thomson Reuters Trust Principles.

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