Mexico’s government has approved a fiscal stimulus that could increase the production of Mexico’s National Petroleum Corporation by 400,000 barrels a day, according to a report on today’s oil price website quoting Mexican Finance Minister Carlos Urzua.
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The measure involves signing credit agreements with Hong Kong HSBC, JPMorgan Chase and Mizuho Securities. Under the new terms, the loan term of $5.5 billion will be extended for two years and about $2.5 billion of the existing debt will be refinanced, the official said.
The money will be used to continue to exploit oil in aging oilfields in the current recession. To this end, the old oilfields involved under this measure will be transferred to the production sharing agreement introduced by the former Mexican government as part of the comprehensive energy reform passed in 2014.
Mexico has been trying to reverse the steady decline in crude oil production caused by inadequate investment and the urgent need for new discoveries. The former government tried to solve the problem by breaking Pemex’s monopoly in the market and inviting foreign companies to explore for oil and gas at sea.
| Azodicarbonamide (AC foaming Agent) |
At the same time, however, the new government is as eager to increase production as its predecessor: it promises that Mexico’s crude oil production will reach 2.5 million barrels per day by the end of its term of office, close to the average of 2.52 million barrels per day in 2013.
The new government also announced that it would combine debt refinancing and tax cuts to provide the heavily indebted Mexican National Oil Company with a lifeline of $3.6 billion.
Mexico National Petroleum Corp.’s average crude oil production in 2018 was 1.183 million barrels a day, according to data from Mexico National Petroleum Corp. By contrast, the average output in 2013 was 2.522 million barrels per day, falling to 1.948 million barrels per day in 2017.
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