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Fuzzy Math
Pemex Oil Output Figures Include Water

Pemex, Mexico’s state-owned oil company, has stagnated in recent years. Production has dropped 23 percent over the past decade, despite there being an additional 22,000 employees on payroll. And those self-reported figures for the amount of crude it is producing haven’t been matching up with the amount of oil it’s processing. The gap between those two numbers just hit a record high this year. As Bloomberg reports, there are a number of possible explanations for that discrepancy, including the fact that Pemex is counting water in its output numbers:

A record gap this year between reported output and what the state-owned company processes is partly explained by measuring systems at older fields that are unable to differentiate water-heavy oil from actual crude, the official said, asking not to be named as Pemex debates reducing figures for the past three years or more. Last month, the company cut its 2014 output forecast to 2.44 million barrels a day.

Pemex, which is preparing to form partnerships with private producers for the first time in seven decades, produced 2.48 million barrels a day through June, while its distribution system processed 2.32 million barrels a day, according to the National Hydrocarbons Commission. The commission didn’t give a reason for the 6.5 percent gap. […] Pemex was probably “setting goals they weren’t achieving and postponing the moment to correct the information,” Adrian Lajous, the oil company’s chief executive from 1994 through 1999, said in a phone interview from Mexico City.

The gap between reported output and what’s actually being processed is large enough to be distressing. That it continues to grow highlights the urgency of the energy reforms President Enrique Peña Nieto has recently championed. While Pemex will no longer hold a monopoly on Mexican oil production, it will still continue to drill a number of conventional reserves. (It was recently granted the rights to every proven and probable reserve it sought, meaning it will control 83 percent of these kinds of plays.) Pemex will also be looking to enter into joint venture partnerships with private firms. As one observer put it, the state-run firm’s questionable accounting raises some “red flags” for these companies.

Mexico may be moving in the right direction with these reforms, but it still has a long way to go if it wants to join the United States and Canada to make the recent energy revolution a truly North American phenomenon.

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