(Reuters) – Mexico does not see the need to reduce its oil exports, as many Latin American producers did last year, because demand and pricing for its flagship crude remains firm, the head of state oil company Pemex’s commercial arm said on Tuesday.
Mexico briefly joined an effort by the Organization of the Petroleum Exporting Countries and its allies last year to reduce production to revive crude prices but it limited its contribution to the cuts to 100,000 barrels per day (bpd) for a couple of months through June. The nation had to curb fuel imports amid lower demand.
“I’m looking beyond the crisis,” Ulises Hernandez, general director of PMI which is in charge of most of Pemex’ trading deals, said at IHS Markit’s CERAWeek virtual energy conference.
“Because of the low (production) costs and, of course, the blend of heavy and light oil that we produce has good demand in the international market, we have not had the need to reduce exports.”
Mexico’s flagship crude grade, the heavy Maya, has also benefited from a narrower price differential against light crude in recent months, Hernandez added.
Pemex’s crude output averaged 1.651 million bpd in January, slightly below the 1.724 million bpd produced a year earlier. Oil exports fell to 979,000 bpd in January versus 1.26 million bpd year-on-year.
A portion of the fuel oil that Mexico would have exported was supplied last month to domestic power plants following an interruption in U.S. natural gas exports to Mexico, which forced the Latin American nation to import liquefied natural gas (LNG) and restart old thermoelectric plants fueled by oil and coal.
Hernandez said that current lifting costs at Mexico’s main oil production areas in shallow waters are below $12 per barrel, a reason why the company has not pushed harder to make unconventional resources available.
“From the beginning of this administration, Pemex has focused on the most profitable onshore and shallow water basins… This is one of the main reasons why this downturn has not driven a major shift in strategy,” Hernandez said.
(Reporting by Marianna Parraga; Editing by Marguerita Choy)