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Pemex recently announced its results for September, with crude
oil production having reached 1.731 million b/d, up 24,000 b/d
since August, but still down by 96,000 b/d year-on-year. There has
been a very slow but still noticeable recovery to observe since May
2019. The company also reported improvements in refined products
output. Pemex has been committed to a new business strategy,
adopted since earlier this year. According to this five-year
business plan, there are plans to increase oil production to 2.7
million b/d by 2024. Mexico's state-owned company has increased
investment in the shallow water fields of the Gulf of Mexico so far
in 2019. Production is expected to expand further by the end of
this quarter, thanks to the start-up of 11 new development wells
and ten exploration wells coming online by the end of 2019.
However, there has been a decline in the company's bottom line
profitability. A net loss of almost 88 billion pesos (USD 4.6
billion), was reported, much worse both quarter-on-quarter and
year-on-year.
Focusing on the impact of Mexican seaborne exports on shipping,
flows from Mexico have been dominated by the US, with the country
still absorbing most Mexican shipments. However, as the distance to
be covered between the two countries is so short, the real impact
comes from flows to the rest of the world. Spain and the rest of
Europe continue importing Mexican grades, with their share having
increased dynamically last month, with total volumes having reached
300,000 b/d. This came in parallel to a sharp decline in shipments
to India since September. India's appetite for Mexican grades has
been rather volatile and affected by price differentials and
availability of cheaper barrels from nearby suppliers, mostly
Middle Eastern exporters, such as Iraq. A similar decline has been
observed in barrels heading to Korea, a route which has developed
since late 2018. However, we're still expecting the Far Eastern
importer to remain interested in Mexican grades, as we approach
2020.
For more information on the movements of the liquid bulk market
visit Commodities at Sea.
Posted 07 November 2019 by Fotios Katsoulas, Liquid Bulk Principal Analyst, Maritime & Trade, IHS Markit
