Mexico's Pemex anticipates a very active "farm-out" season next year that would allow the state-run oil company to gain capital for major offshore and onshore projects, Chief Executive Jose Antonio Gonzalez Anaya told Reuters on Monday.
Pemex last year formed a joint venture with Australia's BHP Billiton to develop the $11-billion flagship Trion deepwater project in Mexico's Gulf, the first partnership after the Latin American country opened its doors to foreign investment in a large oil reform.
The company expects to take on joint venture partners for additional projects including two onshore, one in shallow water and the coveted Maximino-Nobilis deepwater area, which would be awarded before the end of this year.
"The engineers are telling us this is a good field. I would expect, being very optimistic, much interest. I think (the partner) would be a very big company," Gonzalez Anaya said when comparing the coming auction for Maximino-Nobilis with the one for Trion.
Estimated reserves in Maximino-Nobilis are about 503 million barrels of oil equivalent compared with 485 million barrels in Trion. It also is closer to the U.S. border, which would make building transportation infrastructure easier, faster and cheaper, Gonzalez Anaya said.
Exploration expenditures so far for Maximino-Nobilis are about $1 billion. Pemex expects its partner to include this in the joint venture's cost structure, so the Mexican company would not have to put in additional capital until the partner reached that threshold.
Gonzalez Anaya said there was no limit to the number of joint ventures that could be struck. They will depend on time and the level of investment required from Pemex. But the firm will try to focus on deep water and onshore fields that require secondary recovery techniques as those would need more capital.
"(After the first farmouts) we will only be missing partners for non-conventional areas, but our idea is to replicate the farmout model much faster," he said.
In the meantime, Pemex wants to move fast in Trion. A development plan could be approved this week by the two companies and be submitted to Mexico's regulator.
"We are in a rush because we are ready for it and because we need to start as soon as possible," he said. Early production from Trion is expected in 2023.
Inflection Point
Gonzalez Anaya also said in the interview that he expected the company to reach its goal of producing 1.94 million barrels per day (bpd) of crude this year and maintain or slightly increase output in 2018.
If Pemex met these numbers, 2018 would mark an inflection point for Mexico, whose production has been declining since 2004. Falling output has also affected exports and increased the need for fuel imports that have eroded the country's balance of payment.
Pemex also is in talks to find partners for refining units that need investment for modernization or expansion projects.
The company recently announced it was looking for a partner for a $4-billion project to upgrade a coking unit at its Tula refinery and it planned to do the same to revamp hydrogen units at Cadereyta and Madero refineries.
Pemex is open to talks with investors interested in partnerships for specific operational units or a whole refinery. But a refinery sale is not being considered, Gonzalez Anaya said.
If Pemex is successful in bringing foreign investment to its refineries, it would be able to cut maintenance costs, which have been increasing in recent years, as well as the number of outages and unplanned stoppages, he added.
