May 21, 2024
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Mexico Slashes Oil Exports to Focus on Domestic Needs

Mexico’s state energy company, Pemex, is set to reduce crude exports by at least 330,000 barrels per day (bpd) in May, affecting customers in the United States, Europe, and Asia, according to Reuters’ sources.

This decision follows a previous cut of 436,000 bpd of Maya, Isthmus, and Olmeca crudes this month, as Pemex aims to prioritize supplying its domestic refineries to achieve energy self-sufficiency.

According to Reuters, Pemex’s crude production hit a 45-year low in February, prompting the company to ramp up supply to domestic refineries, including the new Dos Bocas facility, which is expected to require an average of 179,000 bpd of crude this year.

Additionally, a deadly fire at a key offshore platform in the Gulf of Mexico over the weekend further impacted production levels.

While Pemex exported 1.03 million bpd of crude last year and 945,000 bpd in January-February, Mexico’s energy ministry anticipates an increase in domestic processing to an average of 1.04 million bpd this year, further reducing barrels available for export.

The sources revealed that the planned cuts in May are expected to total between 10 million and 14 million barrels in total, affecting customers globally.

Despite the significant reductions, Pemex’s trading arm has not declared force majeure over supply contracts, as most contracts include provisions to allocate monthly volumes based on availability.

The Dos Bocas refinery, though operational in processing crude, has yet to contribute finished motor fuels to the domestic market.

Challenges such as increased local demand and dwindling reserves, particularly in old Gulf of Mexico fields, pose additional obstacles to Pemex’s production goals.

Amid discrepancies in Mexico’s reserve data, the outlook for future production is deemed unfavorable, with an inevitable decline anticipated.

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