The Mexican government has slashed the allocation to state-owned Petroleos Mexicanos (Pemex) for Chicontepec oil development in 2010 by more than 60% from this year's level, according to local media.
Mexico's daily El Universal said "poor results, technical limitations, and execution problems" at Chicontepec have caused the Finance Secretariat and the Congress, particularly the Partido Revolucionario Institucional (PRI), to cut the budget for the technically challenging development.
According to Pemex, the Chicontepec complex of low-permeability reservoirs represents 39% of the country's total hydrocarbon reserves. But legislators and financial authorities slashed the investment plan for Chicontepec for the rest of the current administration.
Information from the Budget Decree approved for 2010 reveals that the allocation for the exploitation of the 29 fields in the Tertiary Gulf Oil Project (Chicontepec) totals $1.614 billion, which can be spent beginning Jan. 1.
Pemex also had planned to have available about $5.736 billion more for 2011 and 2012, but after the evaluation of the project, the commitment is for only $4.802 billion, or $919.231 million less.
This situation will force Carlos Morales Gil, Pemex EP director, to adjust activities that he had planned for 2010 in the region that includes Puebla and Veracruz: drilling 975 wells, repairing 371 large wells and 142 small wells, and building 66 km of pipelines.
Morales Gil told El Universal that Chicontepec will produce less oil this year than expected, and that it will produce only 43,000 b/d in 2010.
From Jan. 1 through Nov. 6 of this year, Chicontepec oil production averaged 29,000 b/d; the goal set in the budget was 58,000 b/d.
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