Mexico will have less oil production in 2020 and 2021: EIA

Mexico will have less oil production in 2020 and 2021, according to July projections from the United States Energy Information Administration (EIA).

First, Mexico agreed to cut oil production by 100,000 barrels per day (b / d) under the April agreement of the Organization of Petroleum Exporting Countries and allies (OPEC+).

However, Mexico declined to extend the cuts last June, breaking with other OPEC + producers.

Regardless of the OPEC+ agreement, the EIA forecasts that crude oil production will decline in Mexico in 2020 and 2021, due to the natural decline in mature fields.

Overall, EIA expects Mexico’s average annual liquid fuel production to drop by almost 100,000 b / d in 2020 and a similar amount in 2021.

In the Precriteria of the 2021 Economic Package, the Mexican Ministry of Finance predicts that the country’s oil production platform will average 1,850 million barrels per day (mbd) during 2020 and 2,027 mbd during 2021, lower than the platforms approved by Congress of the Union in the Economic Package for this year of 1,951 mbd and 2,073, respectively.

Both figures are consistent with a conservative estimate by Pemex and private production projections prepared by the Secretary of Energy and the National Hydrocarbons Commission.

Oil production

International oil prices exhibited high volatility in 2019, mainly as a result of the evolution of trade tensions and the existence of geopolitical conflicts.

At year-end, these prices showed a moderate recovery, driven by increases in OPEC+ cuts and by easing trade tensions.

However, in 2020, the greater uncertainty and the prospects of lower growth as a result of the spread of Covid-19, led to a drop in oil prices.

In this context, negotiations between OPEC and its allies were frustrated, which started a price war between Saudi Arabia and Russia, generating further reductions in the price of crude.