Between 2007 and 2010, Pemex spent around $1.8 billion USD on deepwater exploration, accounting for roughly 24% of the company’s total exploration investment during the period. Much of this money was spent on acquiring seismic data and drilling wildcat wells. As a result of its ramped up seismic acquisition programme, Pemex now collects an average of between 15,000 and 20,000km2 of deepwater data per year. The company’s wildcat wells have had a strike rate of 66% – of the 15 deepwater wells the company has drilled in its history, six have been declared viable. Today, nine regions have been selected as promising deepwater areas in the Mexican sector of the Gulf.
Deepwater expansion is becoming increasingly critical for Pemex; Mexico’s reserves in deepwater account for around 50% of the country’s total, an estimated 29 billion barrels of oil equivalent. Pemex has been aware of the need to develop its deepwater resources for over a decade; watching the Americans develop their deepwater fields on the other side of the Gulf of Mexico, it became clear that development of the Mexican sector’s deepwater plays was going to be possible. Perhaps if Pemex had thought more about what would happen to its production rates once the Cantarell field had started to decline, or bet less on the success of Chicontepec, we would not still be talking about the potential of Mexico’s deepwater assets, but rather its results.
Deepwater is not the sole domain of the IOCs; NOCs around the world have had excellent results in their deepwater operations. Statoil has led the way for many years in innovative deepwater development, but perhaps the most relevant comparison should be between Pemex and Petrobras, Brazil’s NOC. Like Pemex, Petrobras controlled a virtual monopoly over Brazil’s hydrocarbon resources, but in 1997, their market was liberalized in order to bring in the expertise needed to develop the country’s deepwater resources. Although not perfect, the country has established a system of production sharing agreements (PSAs) to provide incentive for foreign operators to become a part of Petrobras’ most challenging deepwater projects.
In order to move its campaign up to the stage of successful production, Pemex will not only need to increase its own expenditures on deepwater but will also have to attract the capital of foreign partners, which it hopes to do through a new round of integrated service contracts in the near future. Pemex will not only need to forge these partnerships for capital, but for technology and expertise. Pemex is lacking experience in many aspects of deepwater production, including drilling and design, installation and maintenance of deepwater production systems. Through agreements with international companies such as Shell, BP and Petrobras, and through such inspired moves as the acquisition of a larger stake of Repsol, Pemex is already trying to bring this expertise into its organisation. However, it seems unlikely that Pemex and the Mexican government will ever move to the PSA model, given the country’s constitution, which decrees that all of Mexico’s hydrocarbons must remain the property of the state. But successful partnerships through some other model with deepwater-focused companies will be key if Pemex wishes to fully capitalize on its deepwater resources.