PEMEX:Perspectives and main
Challenges
Nov 6, 2008
2
Results and evolution
Main challenges
Content
3
Pemex at a glance
International
National
Operating statistics
2007(2)
Sales (USD bln)Sales as % of Mexico’s GDP
104.5
12%
Exports (USD bln)Exports as % of current account revenues
49.0
15%
Tax contributions (USD bln)Tax contribution as % of federal government revenue
62.3
40%
Production
Oil (Mln b/d)
Gas (bcfd)
Crude oil refined (Mln b/d)
Petrochemicals (Mln Tones)
Domestic sales:
Transportation fuels (Mln b/d)
Natural gas (bcfd)
Oil exports (Mln b/d)
Employees (thousands)
2007
3.1
6.1
1.3
5.2
1.2
3.1
1.7
147.3
11th oil and gas company worldwide(1)
3rd in oil production
11th in oil reserves
14th in gas production
13th in refining capacity
33th in gas reserves
1. According to rankings by Petroleum Intelligence Weekly, December 20072. Current dollars.
4
4.44.44.44.44.34.14.14.0
0.90 0.87 0.85 0.86 0.88 0.93 1.03 1.16
3.0 3.1 3.23.4 3.4 3.3 3.3
3.1
0
1
2
3
4
5
2000 2001 2002 2003 2004 2005 2006 2007
Total Gas Oil
Pemex: Crude oil and natural gas production
Sustained total production since 2004
Crude oil production has decreased since peaking in 2004
Increased natural gas production since 2003
Total Hydrocarbon Production, (Mln boed)
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20.1 18.9 17.6 16.5 15.5 14.7
17 16 15.8 15.8 15.3 15.1
13 13.1 13.4 14.2 14.3 14.6
454546474850
2002 2003 2004 2005 2006 2007
(1) As of December 31 of each year
Crude oil and natural gas reserves
Total reserves (1), (Bln BOE)
Proven
Probable
Possible
13reserves/production
(years) 12 11 10 10 9
Higher reserve replacement ratios are required to sustain current reserve levels
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Construction of deep conversion units has improved margins at Madero and Cadereyta by increasing distillate yields and processing heavier crude mixes
Gas processing units were built to handle the increasing production from Burgos
Petrochemical operations are focused on the most profitable chains: ethane and aromatics
Oil products, gas and petrochemical production
Product Yields – SNR(%)
Crude run - SNR(Mln bd)
33
30
37
1.1
2000
39
35
26
1.2
2007
Gasoline
IntermediateDistillates
Fuel oil
100% =100% =
64
36
1.2
2000
58
42
1.3
2007
Light
Heavy
2000 2007
Petrochemical sales(Bton/y)
Gas production(Mln cfd)
5,097
3,653
3.2 3.9
8.3
1996 2000 2007
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Results and evolution
Main challenges
Content
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Sustain crude production above 2.8 Mln b/d by 2012. Seek new
opportunities to increase the production level above 3.0 Mln b/d in
the long term
Maintain gas production above 6 bcfd
100% reserve-replacement ratio by 2012
Maintain long term reserve/production ratio above 9 years
Residual conversion in all existing refineries & the new capacity
(reduction of gasoline imports)
Close safety and reliability gaps
Reduce environmental liabilities
Enact crucial operational upgrades
Close efficiency gaps through operational improvement programs
Main goals
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Manage depletion rate of mature fields
Develop low-permeability fields
Implement enhanced recovery methods
Develop Burgos and Veracruz basins to increase non-associated gas production
Implement best practices in project management
Maintain a proved reserve life above 9 years and reach replacement rate of 100% by 2012
Explore deepwater and sub-saline prospects
Exploitation
Exploration
Balanced exploitation strategy to sustain production
Other Exploitation Projects
Other exploration
ChicontepecCantarell
Crude oil production (Thousand barrels per day)
KMZ
ChicontepecCantarell
Other exploration
Natural gas production(Million cubic feet per day)
Other Exploitation Projects
Deepwater
Deepwater
Burgos
Average: 2,884
Average: 6,649
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Production and reserve replacement ratio evolution(Million barrels of crude oil equivalent)
Enforcement SEC´s guidelines3P reserves Only discoveries
1P Reserves. Includes additions, development and revisions
-500
0
500
1,000
1,500
2,000
2,500
90 91 92 93 94 95 96 97 98 99 0 1 2 3 4 5 6 7 8 9 10 11 12
Additions
Production
Additions 2008: 1,053 Mln boe
66%66%57%57%
14%14%
45%45%37%37%
4%4%
53%53%
50%50%
12%12%
23%23%
Additions from existing projects
100%
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55% of prospective
resources are found in the
deep waters of the Gulf of
Mexico
34% are located in
Southeast Mexico, where
PEMEX currently has a
large amount of its
operations
45.4
53.8
Sabinas 0.6%0.3
Burgos 5.8%3.1
Tampico-Misantla 3.1%1.7
Veracruz 1.5%0.8
Sureste 33.6%18.1
Golfo de México Profundo 54.8%29.5
Plataforma de Yucatán 0.6%0.3
1. As of December 31, 20062. As of December 31, 2006. Stochastic addition, results may vary from an algebraic addition
Mexico’s untapped resource potential
3P Reserves, (Bln BOE)(1):
Total prospective resources
(Bln BOE)(2):
BasinsProspective Resources(2)
(Bln BOE)
As a % of Total Prospective Resources
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In recent years Mexico’s demand for automotive fuels has grown above the GDP while production capacity has stagnated. It is expected that this trend on demand will continue in the future.
On the other hand, fuel oil demand has decreased due to substitution with natural gas for power generation.
Refining growth challenges
Cadereyta
Salamanca
Salina Cruz
Minatitlán
Madero Location under study
Tula
Fuel quality & residualconversionFuel quality
New capacity
Main projects 2007-2015
481
762937 999
1996 2007 2013 2015
Gasoline demand (T b/d)
Current production + projects under construction
523 T b/dCurrent production
458 T b/d
14% 40% 44% 48%
Part. of imports
With projects under construction
14% 40% 30% 20%With new projects
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Deep conversion projects at Minatitlán, Salamanca, Tula &
Salina Cruz
Deep conversion projects at Minatitlán, Salamanca, Tula &
Salina Cruz
New refining capacity
New refining capacity
Increase refining margin through deep conversion projects (coking) over national production of heavy crude oil
Additional refining capacity to face growing demand, based on national availability of heavy crude oil
Increase imports capacity and strengthen storage and
distribution
Increase imports capacity and strengthen storage and
distribution
Increase storage and distribution capacity to satisfy domestic demand
Ultra low sulfur fuels(NOM-086)
Ultra low sulfur fuels(NOM-086)
Modernization of existing units and construction of new plants to meet ultra-low sulfur fuels standard
Refining Investment Priorities
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Natural Gas and Petrochemicals Strategies
Increase process infrastructure according to primary production (sweetening, NGL recovery, liquid fractionation, and sulfur recovery).
Capture the benefit associated with rich gas production (non associated) in the Northern Region
Increase transport capacity as required by production and demand
Encourage private sector participation in transport and storage
Diversify supply sources and analyze participation in LNG projects
Focus on most profitable chains and retrieve from non profitable ones:
Encourage participation of private sector to develop new projects and capture business opportunities in selected chains
Increase efficiency and debottlenecking of profitable chains
Divest nonprofitable and marginal chains
Petrochemicals
Natural Gas
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Pemex Strategic lines
Pemex strategy focuses on value maximization and sustainability, involving positive financial results in every business unit, through four strategic lines:
Operational efficiency
Operational efficiency
Social responsibility
Social responsibility
ManagementManagement
GrowthGrowth
Close efficiency gaps in all operationsImprove reliability and productivityExcel in investment project planning and executionDevelop human resources
Strengthen environmental protection, industrial safety and physical securityDevelop healthy relationships with Stakeholders :
Communities where Pemex has operationsClients and suppliersGovernmentImplement new regulatory framework
Improve Corporate GovernanceStrengthen business oriented culture to improve performance
Discover and develop new reservesSustain oil and gas production levelsBuild Downstream and Logistics infrastructure to meet market opportunities, demand growth and environmental standards
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Energy Reform: benefits
Deregulation / new operational flexibility
New budgetary flexibility
More latitude in contracting debt
Gradual use of company’s profits
Increase legal certainty
New contractual models for high complexity projects
New modalities for contracting construction and services
The energy reform represents an answer to diverse aspects
of Pemex’s problems providing several benefits:
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Envisages a smooth transition that will not be a shock to public finances and will not threaten short-term production
and product supply
Energy Reform: benefits
Strengthening of the Board
Independent members
Creation of committees - More effective oversight
Citizen bonds - market accountability
More accountability and transparency
Improved corporate governance
Chicontepec, deep waters, abandoned fields
New fiscal adjustments for strategic projects