November 26, 2009 / 3:24 AM / 10 years ago

Mexico orders Pemex to reduce natgas flaring

MEXICO CITY, Nov 25 (Reuters) - Mexico issued rules on Wednesday compelling its state oil monopoly to slash natural gas flaring at oil fields, which costs at least $3.1 billion a year and is a major source of the country’s greenhouse gas emissions.

The newly-created regulator of oil and gas activities, the National Hydrocarbons Commission, wants gas flaring cut to 2 percent of production by 2012 from 17 percent this year and virtually ended by 2024, the energy ministry said in a statement.

Gas flaring at Mexican oil fields has surged in recent years as Pemex [PEMX.UL] has struggled to maintain oil production, especially at the aging offshore Cantarell deposit.

The Hydrocarbons Commission said the gas being burned off by Pemex was worth 40 billion pesos ($3.1 billion) annually. The overall cost is likely to be higher as flaring gas at oil fields reduces the amount of crude oil that can be recovered.

Pemex has burned off more than 1 billion cubic feet per day of natural gas in recent months because it lacks a gas treatment capacity at Cantarell and other oil fields.

Mexican greenhouse gas emissions have soared in recent years because of the gas flaring, embarrassing the government of President Felipe Calderon, which has put tackling climate change at the top of its foreign policy agenda.

Pemex aims to invest $2.4 billion through 2012 to rein in emissions and has committed to sharply cut the amount of gas it flares by the end of the year. ($1=12.84 pesos) (Reporting by Robert Campbell; Editing by Clarence Fernandez) ((r.campbell@thomsonreuters.com; +52 155 5068 5468))

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