Mexico’s Pemex Struggles To Restore Oil Output Lost After Fatal Fire

Mexico’s state-owned oil firm Pemex has restored part of the oil production suspended after Sunday’s fatal fire that killed seven people, but the pace of output recovery could be slower than expected because of technical issues including well re-connection, sources familiar with the matter have told Reuters.

Mexico’s crude oil production was reduced by more than 400,000 barrels per day (bpd) early this week after a fire on a Pemex-operated platform in the Bay of Campeche in the Gulf of Mexico killed seven people and wounded another six.

The platform where the fire erupted is part of a gas-processing hub in the Bay of Campeche. 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, oil production fell from 719,000 bpd to 275,000 bpd as 125 oil wells were shut down.

By Tuesday, Pemex had recovered 71,000 bpd of the oil production lost after the fire by re-connecting 35 wells, Pemex’s chief executive officer Octavio Romero Oropeza said earlier this week. Another 110,000 bpd of production is expected to return online this week, the manager added.

Pemex plans to restore all production lost after the fire by August 30, Romero Oropeza said earlier this week.

Restoring all the production, however, could prove more challenging than the company believes, according to Reuters’ sources.

“About 70% to 80% of the lost barrels could be online soon, but fully recovering output will be complex,” a source at Pemex told Reuters.

“We’re talking about mature fields and the experience shows how difficult it is to return to normal,” the source added.

The slower-than-expected recovery of Mexico’s oil production could support international benchmark prices and sour crude prices for longer than initially anticipated.