Mexico slashes output forecast

Emilio Lozoya Austin: Pemex chief has confronted operational challenges as head of state led company

Pemex has further cut its production forecast at year end to 2.35 million barrels per day following revelations that production equipment was mistakenly measuring some water as oil.

The state-led Mexican company also revised its estimates of average production from January to July of this year, reporting a hit of 29,000 barrels per day for new estimated overall output of 2.34 million bpd.

That would put the country's output levels at the lowest in at least 10 years, which is the extent of data made publicly available by Pemex on its website.

The decrease, revealed in media reports last week, represents another major blow for the country's production curve, which has been amid a steep decline from about 3.5 million bpd last decade amid falling production at fields like Cantarell.

Meanwhile, Pemex said it has taken various steps to address the problem, including continuous well monitoring, calibration of the systems involved as well as putting into operation systems to dehydrate crude.

Pemex had hoped to report production of about 2.5 million barrels but as of midyear had already been already forced to trim that projection to 2.44 million bpd.

Mexico passed laws earlier this month to open the country's oil industry to private competition.

A decrease in not only production but reserves has underscored the country's dearth of investment in revitalising old production and growing new areas, a problem that advocates hope the reform can address in bringing in new technology and capital.

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