Mexico will press ahead with oil investment and production plans, its energy minister told Reuters on Friday, arguing that a global crash in crude and fuel markets will be short lived and does not merit a change in strategy.
In the coming days, the government will offer investment opportunities in more of its mature oilfields and network of refineries owned by national oil company Petroleos Mexicanos (Pemex), Energy Minister Rocio Nahle said in an interview.
“Today we’re in one of these phases where the price of oil is low, but this will not be permanent. Oil is a great business, the best in the world,” said Nahle.
“We’re going to wait, just like the rest of the world.”
The administration of leftist President Andres Manuel Lopez Obrador is not considering reopening the auctions for exploration and production rights to oil and gas fields, she added, which are favored by many foreign companies.
A close confidant of Lopez Obrador, an energy nationalist who favors a stronger state role in energy, Nahle emphasized that the government was not planning to cut crude production from state-run Pemex, even at its most expensive oilfields, amid global benchmarks losing more than half their value last month.
“All producing countries are maintaining output levels… Pemex is also doing that,” said Nahle, who also heads the Pemex board.
She also said there were no plans to suspend expensive infrastructure projects including the new $8 billion Dos Bocas oil refinery currently under construction and a top priority for Lopez Obrador, who has repeatedly said he wants to wean Mexico off of imported fuels.
Heavily indebted Pemex has suffered 15 consecutive years of falling crude output despite relatively low lifting costs in its mostly offshore portfolio of projects. Its current crude production is more than 1.7 million barrels per day.
Later on Friday, Fitch Ratings downgraded Pemex’s credit rating due to what it described in a statement as “the company’s limited flexibility to navigate the downturn in the oil and gas industry.”
Nahle, who implored ratings agencies to be more “responsible” with the grades they give the Mexican oil giant, emphasized that Pemex will decide which fields it would like private investment, but said those details will likely be unveiled at the weekend or next week.
Mexico’s national electricity company CFE will follow a similar tack, she added.
Producers of crude oil and refined products all around the world have already announced production cuts in reaction to lower demand due to the economic slowdown provoked by the coronavirus pandemic, in addition to growing difficulty finding space for storage.
In Latin America, the largest regional producer, Brazil’s state-controlled Petrobras, this week said it will widen production cuts to 200,000 barrels per day (bpd) from the 100,000 bpd in cuts originally planned, while shortening work hours and delaying investment in oil projects.
In Venezuela, state-run PDVSA has already seen its crude production to fall to around 670,000 bpd in recent weeks – a 25% decline vs previous months – mainly due to mounting inventories of unsold oil as US sanctions on the firm and its trade partners tighten and demand for its crude in Asia plummets.
Latin America’s flagship crude grades lost over $7 dollars per barrel in average this week versus their mid-March prices, according to a Reuters analysis of data provided by traders.
Mexico’s Maya heavy crude, the most important regional benchmark, rose on Friday but for the week averaged $12.75 per barrel vs $17.34 in mid-March, according to data provided by S&P Global Platts.
Despite the prospect of a prolonged price slump, Nahle stressed that the soon-to-be announced government plan should help counter the industry’s gloomy present.
“A lot of (investment opportunities) are coming, and those who are interested, those who are in this business and those who know will enter,” she said.