As Mexico looks to restore production, oil prices go flat

Mexico’s Pemex has restored about 17 percent of the more than 400,000 barrels per day in oil production it lost due to a fire that erupted on an offshore platform this weekend, the Associated Press has reported.

The fire killed five, injured six, and now the company says it had found the remains of two workers who were initially considered missing.

The platform where the fire erupted is part of a gas-processing hub in Campeche Bay. Its outage as a result of the fire reduced Pemex’s production by some 444,000 bpd.

The natural gas processed at the Ku-Maloob-Zaap center is used to boost oil production from offshore fields, Reuters noted in a report citing a Pemex document. As a result of the fire, production fell from 719,000 bpd to 275,000 bpd. The outage is equal to about a quarter of Pemex’s daily output.

Speaking to the media after the fire, Pemex chief executive Octavio Romero dismissed the possibility that the accident was caused by underinvestment.

“There is not a problem of lack of investment, there is not a problem of lack of resources,” Romero said. “The oil industry is a risky industry. We have had accidents, which in numbers are less than in previous years.”

The production outage, meanwhile, caused a spike in the price of heavy sour crude in the United States, as traders prepared for lower supplies from Mexico, Reuters reported on Tuesday, citing unnamed sources as saying the full restoration of lost production could take several weeks. Delays in crude oil deliveries from Pemex are also a possibility.

Pemex, however, has said that the lost production will be restored in full by the end of the month.

“We can report that 35 wells that produce 71,000 barrels per day have been recovered and that we will reestablish 110,000 additional barrels (per day) by opening another 29 wells in the next 36 hours,” Romero said, as quoted by Reuters.

This is the second fire at a Pemex platform for the past two months. The first one occurred in early July. The company said at the time that the fire was caused by a gas pipeline leak and a lightning storm. The location of the blaze was once again the Ku-Maloob-Zaap complex. Now, media reports again point to a gas leak in relation to the accident.

Source: oilprice.com