The state-owned Pemex will increase its investment in the Ixachi field, one of the main assets of its hydrocarbon production strategy. The oil company has increased the amount of investment it will require for the exploitation of the shallow water asset.
In the most recent Expenditure Budget Project of the Federation 2023, which has not yet been approved by the legislature, the state company states that developing Ixachi will have a total cost of 151,273 million pesos. The figure represents twice the investment estimated at the beginning of its development, according to the Treasury’s own documents from previous years. Last year, Pemex considered a total investment of 75,725 million pesos for this field.
The document indicates that, of the total amount, some 29,440 million pesos would be invested next year and 49,172 million pesos in 2024.
In the description of its infrastructure projects, the state company does not give elements to determine the reason for the increase in investment that will go to the countryside and does not mention new infrastructure works that could have resulted in an increase in spending. The state company has also not publicly reported new projects in the field located in Veracruz.
Industry sources explained that the state company has increased its investment in the asset to build infrastructure that allows it to increase its use of gas, but they did not give more details. Ixachi is a field that, for the most part, contains non-associated gas and condensates to a lesser extent, but until now the state-owned company has favored the production of the latter –very light hydrocarbons that are accounted for as crude oil– and has not used the gas, as part of its quest to increase its oil extraction figures. And incidentally it is sending a large amount of pollutants into the atmosphere.
The state company has already been sanctioned by the oil regulator with just over 40 million pesos – the maximum figure – for wasting gas in the complex. Pemex had failed to invest in the infrastructure that allows it to take advantage of it – to reinject it or distribute it and then be used in energy production – according to an investigation carried out by the National Hydrocarbons Commission. When an oil company has a gas field, like Ixachi, it usually prioritizes the extraction and production of gas, but historically Pemex has carried out a different strategy.
Until before the sanction of the oil regulator, the state company had not allocated investment to take advantage of the hydrocarbon and instead placed two burners to let the gas go . Amid pressure from investors, Pemex has said that so far this year it has reduced gas emissions by 44% and is working on a strategy to end methane emissions.
Currently, the regulator maintains a second investigation – still internal – on Pemex for the field, but this time derived from activities carried out by the oil company that had not been previously approved.
Ixachi has risen since the beginning of the six-year term as Pemex’s promising field –although it was discovered at the end of the last six-year term– and has been called the most important onshore asset for the state-owned company in the last 20 years. In May 2019, President Andrés Manuel López Obrador announced during a visit that the field located in Tierra Blanca, Veracruz, would produce 80,000 barrels of oil per day and 600 million cubic feet of gas this year. According to his own calculations, in this 2022 the field would be going through its maximum production peak.
But today the expected figure has not arrived, although last August its production reached a new maximum: 35,446 barrels of condensate per day and 306 million cubic feet of gas. Not a single barrel of oil has been extracted from Ixachi because it is not there.
