Oil and Gas

Oil reserves replacement rate for Mexico's Pemex inched up in 2017

MEXICO CITY, May 9 (Reuters) - The replacement rate of proven oil and gas reserves estimated by Mexican national oil company Pemex rose in 2017 compared to the previous year, according to the firm’s annual filing with the U.S. Securities and Exchange Commission (SEC).

But Pemex’s 2017 replacement rate, a measure of new discoveries compared to ongoing production, still came in far below the industry standard of aiming to replace 100 percent of yearly output with new discoveries.

The Mexican oil giant was able to replace 17.5 percent of the amount of oil and gas it produced last year by adding 174.2 million barrels of oil equivalent (boe) in proven reserves during the same year.

That compared to a replacement rate of just 4 percent in 2016, the company formally known as Petroleos Mexicanos said in its SEC filing dated April 30.

The filing was seen on the firm’s website on Wednesday but it was unclear when it was posted.

Pemex’s 2017 replacement rate means that the company has enough proven reserves to keep pumping at its current pace for another 7.7 years, according to the filing.

Pemex’s 2017 total proven reserves fell 11 percent to reach 6.427 billion barrels compared to the previous year.

“These decreases were principally due to a decrease in oil production in 2017, a decrease in field development and, following bidding rounds conducted by the Mexican government, the transfer to third parties of rights to certain fields included in our 2016 reserves,” the company said in its SEC filing.

Pemex’s decades-long monopoly on exploration and production ended with a 2013 constitutional reform that allowed foreign and private producers to operate oil and gas projects on their own for the first time.

Since the reform, around 100 projects have been awarded to other companies at auction, and last year private producers added some 251 million boe in reserves for the first time.

Despite the new additions, Mexico’s overall proven reserves still fell last year by more than 7 percent, according to data released last month from the National Hydrocarbons Commission, Mexico’s oil regulator. (Reporting by David Alire Garcia and Adriana Barrera; Editing by Cynthia Osterman)