Mexico cuts budget for Chicontepec work

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.

Nov 30th, 2009

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Nov. 30 -- 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 (OGJ, Oct. 19, 2009, p. 29).

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 21.072 billion pesos ($1.614 billion), which can be spent beginning Jan. 1, 2010.

Pemex also had planned to have available about 74.886 billion pesos ($5.736 billion) more for 2011 and 2012, but after the evaluation of the project, the commitment is for only 62.692 billion pesos ($4.802 billion), or 12 billion pesos ($919.231 million) less.

This situation will force Pemex Exploration & Production Director Carlos Morales Gil 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 had been expected and that it will be able to produce only 43,000 b/d in 2010.

From Jan. 1 to Nov. 6 this year, Chicontepec oil production averaged 29,000 b/d, while the goal set in the budget was 58,000 b/d.

The El Universal report coincided with an announcement by Pemex that its crude oil production throughout the country averaged 2.61 million b/d during January-October, a fall of 7.5% over the same period in 2008.

Crude output in October averaged 2.6 million b/d, 160,000 b/d less than in October 2008.

Contact Eric Watkins at hippalus@yahoo.com.

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