The Palmito field, situated in the municipality of China, covers an area of 121.06km2 and is positioned about 64km southwest of Reynosa, Tamaulipas. The field holds gas reserves in the Upper-Middle Eocene Yegua Slump formation, with dry and wet gas.
During CNH’s seventh regular session, it was revealed that the modification to the development plan spans from March 2024 to 2034, involving 17 drilling operations for development wells, along with the plugging of 105 wells and decommissioning of a gas collection station. This initiative is aimed at recovering 50.08Bcf of natural gas at an estimated project cost of US$145.99 million, with US$99.28 million allocated for investment and US$46.71 million for operational expenses.
Additionally, CNH approved a second modification to the Transition Program related to the Racemosa field, discovered in 2021. The program aims to continue preparatory work for extraction and early production of wells, targeting the recovery of 5.51MMb/y of oil and 16.15Bcf/y of gas, at an estimated project cost of US$50.68 million.
These developments come as PEMEX plans to invest nearly US$290 million across four onshore projects, emphasizing its commitment to recovery efforts and addressing its ongoing debt situation. At the end of the third quarter of 2023, PEMEX faced financial challenges, with only 90 cents in short-term liquid assets for every peso of short-term debt, a significant decline from the situation a decade ago when the ratio was 2.9 to 1.
Recently, in response to Moody’s downgrade of PEMEX’s rating, Mexico’s Ministry of Finance (SHCP) implemented a tax relief package, offering the NOC a four-month exemption from taxes to alleviate its financial pressures. Jesús Carrillo, Director of Economics, Mexican Institute for Competitiveness (IMCO), emphasized that this downgrade does not represent much in terms of debt costs as it is a change within the same speculative risk bracket, although it places the state-owned company closer to a “substantial risk” rating, further complicating its financial situation.
Despite being termed as “tax incentives,” this package essentially amounts to forgiving the taxes or contributions that the state-owned company pays to SAT, says Carrillo. Carrillo warned that investment funds holding PEMEX bonds could divest of those securities once the company reaches a certain risk level, which would increase the oil company’s debt costs by making it harder for PEMEX to obtain money in the capital market.
This occurs in an economic environment marked by high interest rates, further increasing PEMEX’s costs when acquiring debt in the capital markets. Carrillo expressed that PEMEX’s financial conditions are very delicate. “It seems that the company cannot take care of itself and needs the government to inject resources,” he pointed out.
He added that around MX$1.5 trillion (US$26.773 billion) have been injected into PEMEX by the federal government between January 2019 and September 2023, of which approximately MX$1 trillion were in direct support of capital projects, and around MX$477 billion were in taxes that the company has stopped paying to the government.