Mexico Natural Gas Production Up in September, but Outlook Mixed

Natural gas production in Mexico continued its winning streak in September, according to the latest statistics from upstream regulator Comisión Nacional de Hidrocarburos (CNH).

Gas production hit 4.180 Bcf/d during the month, compared to 4.060 Bcf/d in August and 3.894 Bcf/d in September of last year.

Natural gas production has seen a consistent rise this year, leading to a slight but noticeable drop in pipeline imports from the United States. Imported natural gas supplied 83% of Mexico’s demand in July, excluding gas produced and consumed by Petróleos Mexicanos (Pemex), according to CNH. This is down from 92% in July 2021, and the lowest figure so far in 2022.

Production is being led by onshore areas in the southeast that the government has deemed “priority fields.” Natural gas-rich field Quesqui led the way among all fields in Mexico in September at 491 MMcf/d. Another priority onshore field, Ixachi, was the fourth largest producer in September at 301 MMcf/d.

Associated gas accounted for 2.472 Bcf/d of the figure. Pemex provided 3.941 Bcf/d of the total.

Meanwhile, oil production in Mexico fell to 1.618 million b/d in September from 1.652 million b/d in August, and 1.665 million b/d in the same period last year. Pemex production was 1.505 million b/d of the total.

But Will It Be Short Lived?

Analysts are predicting a slowdown in oil production growth in Mexico for next year. Given the high percentage of associated gas in Mexico, this would have a knock-on effect on natural gas.

“We have become increasingly bearish in our near-term crude oil production outlook for Mexico,” analysts at ratings agency Fitch said this week. Fitch sees oil production hitting 1.77 million b/d in 2023.

“Over the medium term, we expect Pemex to start production from the contested Zama field which will increase overall output from 2024 on. The balance of risks to our oil production forecast is tilted to the downside,” analysts said.

The slowdown is expected to be caused by declines at legacy shallow water oil producing fields located offshore Campeche. “At the same time, we expect output from the new fields to see a positive but decelerating growth rate,” the analysts said.

Privates Keep Active

In a recent report, OPEC said incremental production in 2022 “is expected to be driven by foreign-operated fields.”

In related news, Wintershall Dea said it had signed an agreement with Hokchi Energy, the Mexican subsidiary of Pan American Energy, to acquire a 37% non-operated participating interest in the Hokchi Block.

“Wintershall Dea is thus expanding its presence in Mexico,” the company said.

The Hokchi Block currently produces around 26,000 boe/d with a planned ramp-up to 37,000 boe/d by 2023.

Martin Jungbluth, managing director of Wintershall Dea in Mexico, said the block “is located in the Sureste Basin, where we already have a strong portfolio of promising licenses and which is therefore familiar to us. It’s near our Zama, Polok and Chinwol discoveries as well as our own operated exploration block 30. We are looking forward to contributing our expertise and working together with the operator to efficiently and safely produce the Hokchi Block.”

Overall private sector production in Mexico continues to climb. In September, private operators produced 113,000 b/d and 239 MMcf/d.

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