Even though the US-China trade war seemed to be on a break, new developments led to oil prices falling sharply on Friday. Private sector player Hokchi saw itself forced to give back its oil fields. Mexico is importing more natural gas and PEMEX is not reaching its goals in regards to refining. However, there has been positive news as well.

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Ensco 8503 rig at Zama. Credit: Cris DeWitt

Trade War Pivot in Falling Oil Prices

As a result of the ongoing trade war between the US and China, the oil market has been continuously affected. This week, US President Donald Trump announced that the US government would limit investments in China and prices of crude oil dropped steeply. Mexico’s prices fell 17 percent and had a slight recovery of 1.7 percent over the weekend.

Government is Not Trying to Control Zama

Even though Talos Energy abandoned half of its operational area in Zama last month, it plans to keep working the other half. As a result, the US State Department considered the possibility of PEMEX taking away the operational control from the Talos-led consortium. However, AMLO denied this possibility, saying the US government does not have all the information and is misjudging his government’s intent.

Could PEMEX Be Refining More Crude Oil to Boost Sales?

PEMEX has been struggling to produce enough oil to achieve its desired crude exports and reach its internal refining goals. Statistics show  the percentage of exports relative to total crude oil production have been the highest in the decade.

Another challenge PEMEX faces is the condition of the internal market. Competition from international players and a renewed stabilization of prices have decreased PEMEX’s sales, with a considerable drop of volume over the last few years. Competition is set to be even stronger in the future as private investment arrives in the country and new actors are eager to do business. In the first half of 2019, investments for oil production and exploration total US$ 9.63 billion.

Hokchi Returns Wells Due to Lack of Success

After four years of exploration, Hokchi failed to find any profitability in its two exploration wells in the Gulf of Mexico. This led the company to return its contract, which was the first one signed by a private company in Mexico.

Saudi Arabia Plans IPO Push of US$75 Billion

Planning to attract investors, Saudi Arabia instigated this push while reducing its global expansion plans. The goal is to increase cash flow.

 
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