Amid Soaring Prices, Eni Ships First Oil from Deepwater Mexico Project

Italy’s Eni SpA, one of Mexico’s leading private sector oil producers, said it has begun shipping oil from a deepwater project offshore Tabasco to the international market.

The company’s first cargo from the Miamte floating, production, storage and offloading (FPSO) platform in the Gulf of Mexico shipped last week. The company hailed it as an important milestone for the oil and gas sector in Mexico, making Eni the “first international energy company to develop a complex offshore project” in Mexican waters able to export to global markets.

The news comes amid oil prices that this year have regularly exceeded $100/bbl. On Tuesday, Halliburton Co. CEO Jeff Miller said oil and natural gas equipment was “almost sold out” amid increasing upstream activity and soaring prices.

In mid-2019, Eni became the first private sector operator to record offshore oil production in Mexico at its Area 1 project. Area 1 includes the Amoca, Miztón and Tecoalli fields with a total of 2.1 billion boe of recoverable resources, of which 90% is oil.

“This fast-track development has been possible thanks to the full alignment between the Mexican government, the relevant local authorities and Eni, and confirms the company’s commitment to meet project schedule and contractual obligations, actively supporting the country in the implementation of its energy development plan,” the company said.

The FPSO has a crude oil treatment capacity of 90,000 b/d, a crude oil storage capacity of 700,000 bbl and a gas treatment capacity of 75 MMcf/d. It was designed with “a zero-flaring philosophy,” the company said.

In February, offshore Area 1 produced 9,336 b/d, according to data from Mexico upstream regulator Comisión Nacional de Hidrocarburos (CNH).

The full development of Area 1 will include 33 wells connected to three wellhead platforms and a monopod, in addition to the FPSO.  The first two wellhead platforms are in operation in the Mitzon and Amoca fields.

Even as some companies have backed away from Mexico’s deepwater, executives have said the country is a key to Eni’s organic growth strategy. Total country output is forecast to ramp up to 65,000 boe/d in 2022 and reach a plateau of 90,000 boe/d in 2025. 

Currently, Eni holds rights in eight exploration and production (E&P) blocks, including six as operator, all in the Gulf of Mexico’s Sureste Basin. Last August, the company announced a deepwater find in the Sureste Basin, with preliminary estimates indicating 150-200 boe in place.

Private Production Rising

Mexico’s president Andrés Manuel López Obrador has said the country aims to export more oil  temporarily amid high prices to help pay for the nation’s fuel subsidy. In January, Mexico increased crude exports to the United States by 130,000 b/d, according to the latest OPEC market report.

But state oil company Petróleos Mexicanos (Pemex) is expected to see a drop in production this year as its mature fields decline, according to OPEC. For 2022, overall oil production is forecast to rise by 30,000 b/d, with “foreign-operated field output” driving the increase.

In February, Mexico oil production reached 1.63 million b/d, down from 1.67 million b/d in the same month last year. Pemex production fell year/year to 1.55 million b/d from 1.61 million b/d.

Private sector producers meanwhile supplied a record 88,655 b/d, up from 51,958 b/d in the same month last year. 

Meanwhile, natural gas production in Mexico totaled 3.94 Bcf/d in February, up from 3.8 Bcf/d in February 2021, according to CNH. Pemex accounted for 3.71 Bcf/d of the total, up from 3.6 Bcf/d in the year-ago month. Private sector producers, meanwhile, supplied 232.7 MMcf/d, up from 200.2 MMcf/d.