September 24, 2019 / 7:28 PM / 23 days ago

Mexican president heaps fresh scorn on predecessor's oil reform

MEXICO CITY (Reuters) - A sweeping oil reform enacted several years ago in Mexico came under fresh attack from President Andres Manuel Lopez Obrador on Tuesday, as he dismissed it as a giveaway that has yielded no additional output from new private entrants into the market.

FILE PHOTO: Mexico's President Andres Manuel Lopez Obrador attends a news conference at the National Palace in Mexico City, Mexico, May 31, 2019. Picture taken May 31, 2019. REUTERS/Henry Romero

The president also appeared to dampen speculation from some business-friendly advisers that he will re-authorize auctions open to private producers as a way to pump more oil.

Lopez Obrador, who won office last year promising to revive ailing national oil company Pemex, reiterated his criticism of the 2013 constitutional reform enacted by former President Enrique Pena Nieto.

“If there’s no production from the (energy reform’s) contracts that were given away, we can’t say we’re going to continue giving away concessions,” Lopez Obrador said at his regular morning news conference.

He was referring to more than 100 exploration and production contracts awarded in competitive oil auctions from 2015 to 2018, while appearing to dismiss calls he bring back the auctions his own administration suspended.

Oil output from contracts awarded under Pena Nieto averages about 85,000 barrels per day (bpd), according to July data from oil regulator CNH.

Much of that output comes from Pemex allotments that were migrated to new contracts under the same reform. Still, more than 10,000 bpd comes from new private producers, a figure that continues to grow as most projects remain in early stages.

Output at Pemex, the world’s most indebted oil company, has fallen by over half since 2004 due to the natural decline of its most productive fields and failure to discover new ones.

Lopez Obrador again said he does not want to modify the reform but instead to strengthen Pemex’s finances.

“What we’re showing is that if a state-owned company is managed honestly and efficiently, it performs and the profits go to the nation,” said Lopez Obrador.

The president reiterated that Pemex oil output will grow to 2.6 million bpd by the end of his term in 2024.

Pemex Chief Executive Octavio Romero told the same news conference that Pemex’s production will rise to 1.778 million bpd by the end of this year, thanks to new wells coming online, from 1.715 million bpd so far in September.

Pemex reported on Tuesday that August crude oil production averaged 1.683 million bpd while crude exports totaled 1.082 million bpd, both up slightly from July.

Romero said proven reserves will also increase during the administration.

Reporting by Adriana Barrera and Ana Isabel Martinez; Additional reporting by David Alire Garcia; Editing by Jan Harvey and Cynthia Osterman

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