Still grappling with a major restructuring, Mexico's state owned Petroleos Mexicanos (Pemex) has logged declines in many operating sectors.
But with the restructuring program nearly complete, Pemex said it is more efficient and poised to take advantage of increased opportunities.
Pemex has been cutting its work force since 1990, with the number of employees declining to less than 110,000 in 1993 from about 215,000 in 1990.
The April 1992 explosion of gasoline that leaked into a sewer line in Guadalajara sparked widespread criticism of the company. The clamor for action led President Carlos Salinas de Gortari to later order a major restructuring program for Pemex (OGJ, Aug. 13, 1993, p. 55).
Pemex was divided into four major operating subsidiaries, each in charge of its own budget, planning, work force, investments, and properties under a holding company operated by Pemex.
The four are Pemex Exploration & Production, Pemex Refining & Distribution, Pemex Gas & Basic Petrochemicals, and Pemex Petrochemicals.
While there were reports that foreign private companies might be allowed more participation in Mexican exploration and development, on Mar. 18, 1993, the 55th anniversary of Mexico's nationalization of its oil industry, Salinas and Pemex Director Gen. Francisco Rojas reiterated Pemex will not return to offering risk contracts in exploration, saying, "Risk contracts are nothing but a disguised sale of petroleum reserves."
FINANCIAL PERFORMANCE
The company reported 1993 revenues of $20.48 million vs. $21.11 billion in 1992. Net earnings from operations also fell in 1993, to $944.84 million from $1.07 billion in 1992.
During 1993 Pemex reduced its debt by $68 million, and as of Dec. 31, 1993, total debt was $8.96 billion, 85% of which was external. Pemex borrowed $2.558 billion on the international market during 1993, of which only $343 million was generated by lines of credit.
The company signed an agreement with U.S. Export-Import Bank in August 1993, under which Eximbank offered a guarantee for exploration and development projects in the Campeche and Caan areas of Campeche Sound. The projects are part of Pemex's $20 billion investment plan covering 1992-97.
PRODUCTION
In 1993 Mexico's crude oil production amounted to 2.67 million b/d, down slightly from the year before.
Of total oil production, 1.95 million b/d was from offshore fields. The onshore southern region provided 23.417,c of the country's crude production.
The company cited its Cantarell project in the Gulf of Campeche as a key to stabilizing production. The $860 million project, which includes new gathering systems and additional wells, is expected to maintain Cantarell production at more than 1 million b/d for several years.
Natural gas production in 1993 averaged 3.576 bcfd, a 1% decline from the prior year. The southern re,-ion contributed 52.9% of that total, offshore 34.8%, and the northern region 12.3%.
Pemex drilled 66 wells in 1993, of which 19 were wildcats and 47 were development wells. The company reported completing 78 wells during the year with a 57% success rate for wildcats and 89% for development wells.
In the last 3 years Pemex has found 38 fields, as many as it discovered during the preceding 6 years. Nearly 90% of its 1993 development spending went for work in Caan, Taratunich, and Ek-Balam fields.
Pemex placed its proved crude oil reserves at 50.9 billion bbl as of Jan. 1, 1994, and total hydrocarbon reserves at 64.52 billion bbl of oil equivalent.
EXPORTS, IMPORTS
Although petroleum is no longer Mexico's dominant export, it still accounts for almost one third of the country's foreign hard currency income. In 1993 Pemex provided 30.2% of Mexico's export earnings and about one third of all public sector income, about the same as in 1992.
Crude exports totaled 1.337 million b/d in 1993, down 2.4% from 1992. However, Pemex reported the export mix changed in 1993, with Maya crude's share of exports down to 64.1% from 67.5% and Olmeca crude's share up to 16.3% from 11.5%.
Mexico earned $6.018 billion from crude oil and petroleum products exports in 1993, a decline of about 11% from 1992, due to the fall in world oil prices.
In fourth quarter 1993 world oil prices dropped as low as $10.63/bbl, and Maya crude averaged less than $10/bbl in November and December. Pemex reported an average export price of $13.19/bbl for 1993 $1.69/bbl less than in 1992 and $1.65/bbl less than budgeted by the government.
The U.S. in 1993 remained Mexico's No. I crude oil customer with 66%, Europe 21%, the Far East 6%, and Central America, South America, and Canada a combined 7%.
Pemex reported December 1993 net natural gas exports at 19 MMcfd.
Natural gas imports for the year declined to 97 MMcfd from 250 MMcfd in 1992. The company's gas imports and exports were balanced in first quarter 1994.
Added demand for U.S. natural gas may occur as a result of liberalization of Mexico's electric power sector that allows private firms to generate power for sale to end users through the national utility grid.
Mexico exported 156,000 b/d of refined products in 1993, about 40,000 b/d more than in 1992, and imported 84,000 b/d of gasoline, about the same as in 1992.
PIPELINES, STORAGE
Pemex has a monopoly on all pipeline shipments of crude oil, natural gas, and refined products in Mexico. It owns and operates 36,000 miles of pipelines.
There recently has been speculation that the government might take steps toward allowing private companies to distribute gas in some of Mexico's larger cities along electric power and telephone utilities' rights-of-way. However, there are questions as to whether that would be feasible outside of small cities and how best to settle the issue of Pemex pipeline ownership.
This year, Pemex and state owned electric utility Comision Federal Electricidad (CFE) agreed to cooperate in the Merida III power plant project. Merida III will require Pemex to lay a 700 km pipeline from Tabasco to Yucatan to supply natural gas to three states and the power plant.
During 1993, Pemex transported an average 1.342 million b/d of crude oil, about flat with 1992 levels. In addition, Pemex in 1993 transported 152,200 b/d of liquefied petroleum gas through the Cactus-Tula-Guadalajara pipeline and almost 7,000 b/d of methyl tertiary butyl ether.
Pemex has less than 10 million bbl of crude oil storage capacity. It leases a tanker moored at Cayo Arcos in the Gulf of Mexico that provides 1.9 million of floating storage for export crude.
Construction is complete on seven salt caverns at Tuzandepetl to give Pemex an added 6.95 million bbl of commercial oil storage. Three more caverns are 90% complete. Pemex completed two other caverns in 1991 to store natural gas liquids.
In December 1993, Pemex Refining & Distribution asked for bids from the private sector to construct four storage and distribution terminals for refined products. Pemex plans to lease the terminals for 15 years with a 10 year renewal or purchase option. They will replace obsolete terminals at Mexicali, Zacatecas, Aguascalientes, and Reynosa.
REFINING
Pemex Refining & Distribution earned about $324 million before taxes in 1993 and spent more than two thirds of its revenues on purchases from Pemex subsidiaries. During the year the company refined an average 1.32 million b/d of crude, a 2.4% in-crease from 1992's level.
Start-up of the Salina Cruz refinery was instrumental in the increase.
Imports of unleaded gasoline in 1993 were about flat with 1992.
The gap in earnings per barrel of refined crude between refineries in the U.S. and those in Mexico has narrowed to about $1 in 1993 from about $2.10 in 1989.
The government encourages use of unleaded gasoline to reduce air emissions, but Pemex does not have the refining capacity to meet demand.
In February 1993 Pemex agreed to a joint venture with Shell Oil Co., purchasing a 50% interest in Shell's 225,000 b/d Deer Park, Tex., refinery. That gave Pemex a secure outlet for processing its Maya crude while it upgrades and expands its refinery base in Mexico. Pemex is participating in a $1 billion upgrade of the Deer Park refinery.
Pemex plans to export 100,000 b/d of Maya crude to the refinery and reimport 45,000 b/d of unleaded gasoline. The company said it soon may purchase added refining capacity in Louisiana.
For 1994 and beyond, investment in Mexico's refinery sector will be dominated by environmental protection projects, Pemex said.
PETROCHEMICALS
Pemex Gas & Basic Petrochemicals, in charge of processing natural gas and natural gas liquids and production of primary petrochemicals, reported 1993 earnings of $155.3 million before taxes, with subsidies of about $247 million. The company said subsidies may end this year.
Petrochemical production increased slightly in 1993, but the value of exports declined. The country exported $159 million more in petrochemicals than it imported. The most important petrochemical import in 1993 was propylene, and Pemex expects completion of a propylene plant in the Morelos complex this year to eliminate the need for those imports.
In November 1993 the company broke ground for a $18 million, 10 million 1./month lubricants plant in Lagos De Moreno, Jalisco state.
Pemex planned this year to begin construction of three condensate processing plants, including one to distill hydrocarbons and one cryogenic plant. About 80% of Mexico's petrochemical industry uses natural gas feedstock.
Pemex Petrochemicals, which controls production of secondary and tertiary petrochemicals, lost about $240 million in 1993, due mainly to subsidies it provides on the local market. Pemex Petrochemicals also must absorb transportation costs because its customer base is not highly concentrated in one area.
Petrochemical sales increased in 1993 by about 30%.
Early in 1993 Pemex said it plans to begin withdrawing from the secondary petrochemicals business by closing some obsolete plants and privatizing others through international open bidding. However, last June the company postponed privatization plans.
Copyright 1994 Oil & Gas Journal. All Rights Reserved.
Issue date: 12/12/94
