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Mexican crude oil production has been under severe pressure,
with volumes down so far this year. Focusing on each stream's
performance, the country has been producing around 1.1 million b/d
of Maya, very similar to last year's levels, while production of
Isthmus dropped below 500 thousand b/d, from around 600 thousand
b/d in early 2018. A similar trend has been observed in the
production of Olmeca, which fell from 220 thousand b/d a year ago
to around 150 thousand b/d in 2019 Q2. The Maloob field has been
responsible for most of the decline so far, bringing overall levels
marginally below 1.75 million b/d so far this year.
State oil firm Pemex recently announced that the company's
production averaged 1.68 million b/d in June, slightly higher than
production of 1.66 million b/d reported in May. The company also
expressed its optimism that its production could surpass 1.8
million b/d by the end of this year, with additions coming from
several fields currently under development. However, the market
seems to be sceptical around the progress so far, with references
made regarding the company's debt. Pemex has, however, been denying
rumours on facing any difficulties in paying suppliers.
In terms of the trend followed so far in the country's output,
decline is expected to last, with volumes most likely to reach 1.7
million b/d by the end of this year. Crude oil liftings heading to
India and South Korea have managed to strengthen since March 2019,
with Mexican barrels partially replacing Iran and Venezuela. Flows
to the United States seem to have declined sharply in June, having
been potentially affected by earlier expectations around the US
imposing tariffs on Mexican crude oil, while Spain and the rest of
Europe continued to import more, with volumes approaching 300
thousand b/d.
Mexico's role in supplying more to the US to cover lost
Venezuelan barrels is expected to last, with flows set to return to
normal levels from next month onwards. This assumes that the
relationship between the two countries doesn't deteriorate any time
soon. However, as Mexico has been focusing on reducing its
dependence on US supplies of oil products, an increasing share of
the country's crude oil output has been heading to the domestic
refining sector.
Posted 28 June 2019 by Fotios Katsoulas, Liquid Bulk Principal Analyst, Maritime & Trade, IHS Markit
