Random Information - Part 2 The political side is a bigger challenge in that there is a disconnect between what AMLO says and what is reality. Some of the things the Government announces just don’t make any sense even though they may sound good. For example the Government has indicated they have a plan to boost Pemex by finding them more funding for oil exploration and giving Pemex tax breaks. The Government announced that Pemex would be getting $200 million tax relief over the next few years and that this will help a lot. Bottom line is that Pemex paid U.S. $ 27.0 Billion in taxes in 2018 and is going to get U.S.$ 200 million in tax relief. Do the math. 200,000,000 / 27,000,000,000 or about 3/4 of 1.0 percent of what the Government takes from Pemex. When the Government says they will increase Pemex exploration budget by ten per cent to U.S. $4.3 billion per year so that oil production can be boosted to 2.6 BOPD, again this sounds good, however, $4.3 Billion invested in offshore, or conventional onshore or in shale will eventually lead to about 150,000 BOPD which would not even offset a one years decline. It will take years to bring the offshore oil into production. So if Pemex spends 4.3 Billion per year into offshore oil, within a few years Pemex will be able to produce enough new oil to offset the annual decline. It won’t move the needle on getting production back up to 2.6 Million BOPD.
Conventional onshore oil is not the answer either. The recent news article announcing that $250 million will be invested to get an increase in production of 9,200 BOPD.While this is good news that various projects are getting approved, consider the numbers. $250 million to get an increase in production of 9200 BOPD. The increase is by 10,000 BOPD or $25 Million per 1000 BOPD which should provide about a 14 month payback which is okay. However, private investment offshore will make an impact, but not a quick impact.
ROE has pointed out many times that the shale oil development can happen quickly and can get Pemex and Mexico to its target.
Management said that the Government has no plan or idea of how to get the Country to 2.6 million BOPD in 6 years. It is just a political statement.
When it comes to shale development management said it is absolutely clear to Pemex and all of the companies in Mexico that nobody has a team that even comes close to the team and expertise that ROE has for developing shale oil. ROE is way above every body.