Pemex is a public company that is continuing to grow strongly after 73 years of operation. It is recognised worldwide as one of the top four crude oil producing companies, ninth in natural gas extraction and 11th for value of sales.
In the past five years, Pemex has had one of the highest yields in the petroleum industry worldwide. Its operating income in 2010 was over $44bn, 27 percent more than last year.
Pemex is the first company in Mexico and a key contributor to the public purse. In the last five years it has provided approximately $250bn to the nation’s development.
Currently, Pemex is ready for a new stage of growth. After a series of efforts to halt the fall in oil production caused by the expected natural decline of Cantarell supergiant oil field in the Gulf of Mexico, it has manage to stabilise oil production at around 2.55 million bbl/d and has laid the foundation and the production rate to increase its production to more than three million bbl/d by 2016.
Over the past two years, Pemex has concentrated its efforts on stabilising the Cantarell production and on increasing the production of its other assets. These tasks have been successful because, to date, Pemex has a more diversified portfolio of oil fields; without considering the effect of production at Cantarell, the production growth exceeds that of most oil producing countries in the world. The five-year compound annual growth rate of Pemex production, excluding Cantarell, was nine percent: equal to an increase of 720,000 bbl/d.
Exploratory future
Cantarell field dependence has declined significantly. In 2004, this asset accounted for more than 63 percent of total production; today it contributes only 20 percent.
The future of Pemex is based on its exploratory capacity, an adequate reserve replacement, and on efficient hydrocarbon processing. Mexico’s 3P (proved, probable and possible) reserves represent more than 30 years of production at current rates.
The replacement rate of proved reserves has been increasing steadily: from 23 percent in 2004 to 86 percent in 2010. This situation places Pemex on the path to meet the goal of its business plan, which is to achieve a reserve incorporation of 100 percent for next year.
In this regard, the challenge is to increase the pace and efficiency in the exploration, production and processing of the extraordinary oil legacy that Mexico has, within a framework of efficiency and respect to the environment.
Likewise, Pemex is focusing on processing crude oil in a more efficient manner, and improving the logistics and distribution of natural gas, oil and petrochemicals. In order to do so, it has strengthened its planning, management and decision-making processes.
Legislative support
The Energy Reform of 2008, passed by the Congress of Mexico, provided Pemex with new elements to improve its performance. Particularly, the comprehensive contracts for exploration and production will help the company accelerate its pace of activity.
But last August, the first round of bids for these contracts – for the exploration and production of mature fields in the southern region – was a failure, despite awaking interest from 27 national and foreign industries, which purchased more than 50 bidding packages.
These contracts seek to expand and strengthen the operations of its subsidiary, Pemex Exploration and Production (PEP), through a competitive model, and to expand its operational flexibility and execution ability, by implementing new technology into its processes, which will result in greater efficiency and in an increase in gas and oil production.
The first mature fields that were bidded, Magallanes, Sanctuary and Carrizo, covered a total area of 312sq km with an oil reserve of 207 million boe. Its current production is about 15,000 bbl/d and it is estimated that it will increase to 55,000 bbl/d with the new comprehensive contracts.
At the same time, the General Director of Pemex, Juan Jose Suarez Coppel, presented the Demand Forecast of Goods and Services 2011-15, which is a tool aligned to the institution’s transparency efforts. This will enable it to strengthen its role as one of key drivers of Mexico’s development.
Responsible energy
Pemex is at the threshold of a new expansion phase, thanks to the tremendous growth seen recently following its investment programme. With over MXN 300bn in capital spending and purchases of goods and services totalling MXN 100bn annually, the company is an important mechanism for the industry’s development.
According to its business plan, and based on the key elements for sustainable development of the company, Pemex has focused all the components of its corporate responsibility on actions that allow for a safe, reliable, cost-profitable and sustainable organisation.
As a complement to the direct incorporation of corporate responsibility, in 2008 Pemex formed a Citizen Participation Group, through which it seeks to gather the opinions of members of society to help improve its performance in social and environmental responsibility.
Thus, Pemex reaffirms its commitment to maintaining a safe operation as a necessary and indispensable condition for achieving the reliability of the facilities, business profitability, sustainability of activities and the protection of communities and ecosystems in which it operates. This effort has been achieved through the consolidation of the Safety, Health and Environmental Protection System.
As a result of this, in 2010 the company maintained for the second consecutive year an accident frequency rate of 0.42 injuries per one million man-hours worked; the lowest level in its history and below the global average of 0.5.
It also improved its environmental performance trend, reducing by 22 percent its air pollutant emissions, by 0.5 percent its hard water use, by 21 percent its hazardous waste inventory and by four percent its inventory of environmental liabilities.
The company received 148 Clean Industry Certificates, out of which 39 were awarded for the first time to facilities and 109 were endorsed as a result of maintaining and improving environmental performance, and it continued its commitment against the climate change effects by reducing the emission of 4.8 million tons of carbon dioxide, equivalent to discontinuing the use of one million cars, as a result of carrying out the direct mitigation of gas flaring, energy efficiency and cogeneration.
Driving mexico
In order to ensure that Pemex remains an important part of the nation’s development, in 2010 the company approved its business plan, which detailed the strategies through which it would seek to transform itself to be recognised as a safe, efficient, profitable, modern, transparent and sustainable company.
With this plan what is being sought is to maximise the economic value of the company in a sustainable way, based on four lines of action – growth, efficiency, corporate responsibility and management modernisation – each with a number of specific strategies.
At the same time, due to the fact that the oil industry requires using and developing technology in an intense manner, a Technologic Strategic Plan was designed to facilitate the achievement of the goals outlined in the business plan.
In short, what Pemex is seeking is to align its work with the creation of economic value for the benefit of Mexican society, under social and environmental responsibility criteria, strengthening energy security and playing an important role in the country’s economic growth.
