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By Adam Williams and Lucia Kassai
“Petroleos Mexicanos plans to develop most of the 120 oilfields the government granted the state-owned company, returning “only a very low percentage,” according to the company’s chief executive officer.
The production regions were given to Pemex, as the company is known, when Mexico’s oil industry opened to private competition in 2014. Pemex had three years to invest in the fields or return them to the regulator to be auctioned in future bidding rounds.
As the three-year deadline nears, Pemex is likely to maintain the majority of these fields, Jose Antonio Gonzalez Anaya, the company’s CEO, said in a Bloomberg Television interview from Houston.
“We are trying to make progress to make sure we meet the regulator’s requirements, especially the ones where we know there is oil and where there is production,” he said. “I think we will develop the fields that have been assigned to us.”
Appointed as Pemex’s CEO last year, Gonzalez Anaya’s impact on the company’s ailing financial standing has been immediate. After four years of losses, Pemex yesterday reported first-quarter earnings of 87.9 billion pesos ($4.6 billion).
“The last time we posted a profit the price of oil was $100 per barrel. To post a profitable result when the price of oil is around $40 is important,” Gonzalez Anaya said. “This is no small achievement.”
Production Growth
Pemex, which has seen oil output fall every year since 2004, hopes production will stabilize this year and possibly increase as soon as 2018, he said. In addition to joint ventures planned in onshore, shallow and deep waters fields, Pemex is also looking to “cluster small allocations and small fields so that we can migrate them together,” he said.
The company is counting on a recently implemented oil price hedge — independent of the Mexican government’s hedging program — to give Pemex “some degree of certainty to our investment and to our planning,” Gonzalez Anaya said. Pemex, which hadn’t hedged independently from the government in 11 years, will likely use the tool again next year, he said.
Pemex will also seek additional hydrogen unit joint ventures at its refineries, similar to the partnership signed with Air Liquide SA in February at the Tula refinery, he said.
“This model will be replicated for other refineries, and I think things will run much better,” Gonzalez Anaya said of the additional partnerships planned for refineries.”
4 de mayo de 2017 13:04 GMT-5
Money managers, producers and consumers made the biggest bets on West Texas Intermediate crude prices in nine years, amid signals more volatility is coming.
Global markets were roiled after Donald Trump’s election as U.S. president and as OPEC continued negotiations on a deal to cap output. The U.S. dollar climbed to the highest since January. A measure of oil volatility surged last week to a seven-month high, a sign that traders were anticipating bigger price swings.
Wagers on higher and lower prices held by speculators and hedgers reached 1.47 million contracts in the week ended Nov. 15, the most since 2007, U.S. Commodity Futures Trading Commission data show. Trading volume of calls giving investors the right to purchase WTI futures rose to a record that day. The CBOE Crude Oil Volatility Index reached the highest since April. Brent oil shorts, bets that prices will fall, rose to the highest in more than two years.
“There’s tension in the market, with both producers and consumers worried about what OPEC does or won’t do on Nov. 30,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “They want to be protected from surprising price moves.”
OPEC Meeting
Investors are weighing the chances that the Organization of Petroleum Exporting Countries will complete a deal to cap output at its Nov. 30 meeting in Vienna. While Saudi Arabian Energy Minister Khalid Al-Falih told Al Arabiya television he’s optimistic a deal will be reached, only seven of 20 analysts surveyed by Bloomberg last week expect the group to set output targets for its members.
OPEC agreed in September to cut their collective output to 32.5 million to 33 million barrels a day and has been trying to persuade other suppliers, notably Russia, to join the cuts. OPEC Secretary General Mohammed Barkindo said he’s confident the group can reduce record oil inventories and bring forward the rebalancing of the market.
“The Saudis are working hard to reach a deal,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “You don’t fight the Fed in the bond market and when it comes to oil you don’t fight the Saudis.”
The September agreement marked the end of OPEC’s two-year long experiment with pumping at will. Saudi Arabia led the group in the effort to grab market share and curb the development of more expensive reserves such as U.S. shale.
U.S. Production
While U.S. production has dropped from last year’s 44-year high, the decline is slowing. The Energy Information Administration this month raised its output forecast for 2017. Rigs targeting oil in the U.S. rose the most in 16 months last week, according to Baker Hughes Inc.
Producers and merchants increased short positions, or protection against lower WTI prices, to the highest level since March 2011. They added 66,613 bearish contracts over the past two weeks as prices retreated from last month’s peak at above $50 a barrel.
“The Saudis want higher prices but won’t sacrifice just to see a major competitor, U.S. shale, benefit,” said Sarah Emerson, managing director of ESAI Energy Inc., a consulting company in Wakefield, Massachusetts. “The Trump election changes things. In one day the U.S. shale business got better. The government will be more responsive to the industry.”
Money managers’ net-long position in WTI advanced for the first time since mid-October, climbing by 3,906 futures and options to 163,321. Shorts climbed 14 percent while longs rose 8.1 percent. WTI gained 1.8 percent to $45.81 a barrel in the report week. It rose 2.7 percent to $46.93 as of 8:48 a.m. on Monday.
Brent Bets
In the Brent market, money managers increased short positions by 11 percent to 157,016 during the week, the highest level since September 2014, according to data from ICE Futures Europe. The net-long position in the global benchmark slipped by 4.6 percent during the week to the lowest since January.
In fuel markets, net-bullish bets on gasoline decreased 35 percent to 25,796 contracts, as futures slipped 2.5 percent in the report week. Money managers were net-short 393 contracts of ultra low sulfur diesel, from net-long 7,791 the previous week. Futures advanced 0.2 percent.
“I suspect that when the OPEC meeting is over there will have been a lot more smoke than fire,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “If they don’t come up with a convincing agreement, they’ll be forced to revisit the issue before long.”
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