MercoPress. South Atlantic News Agency

AMLO announces plan to reshape Mexico's oil production

“It is a very realistic plan and it can be achieved if we all participate,” said AMLO.

Mexican President Andrés Manuel López Obrador, commonly referred to by his acronym as AMLO, Saturday launched the National Plan for the Production of Hydrocarbons in a move to strengthen the country's oil industry.

 AMLO's plan aims at boosting output by recovering oil deposits and increase output to 2.4 million barrels of oil per day by 2024 to achieve the country's energy sovereignty.

The project is based on the recovery of mature deposits on the Gulf of Mexico coast which the state company Petróleos Mexicanos (Pemex) considered to be exhausted.

“It is a decisive moment in the history of our country and in the history of oil exploitation, I'm not exaggerating, it is something similar to what had to be done in 1938,” AMLO said at an event held in Ciudad del Carmen, evoking the nationalization of the oil industry decreed by former President Lázaro Cárdenas.

“It is a very realistic plan and it can be achieved if we all participate,” said AMLO as he insisted on his idea to move the Pemex headquarters from the capital city to Ciudad del Carmen.

For years Pemex has suffered from a decrease in production, an aging infrastructure and severe budget cuts that led to staff cuts and less ambitious goals. The company has struggled to raise additional funds amid rising pension obligations, high taxes, fuel theft and other inefficiencies.

AMLO underlined that for this project to succeed it is very “very important ... to end corruption in Pemex” and called for transparency in the delivery of contracts, in the exploitation and sale of hydrocarbons.

The plan announced by the Head of State also includes the refurbishment of six existing refineries in the country, plus the construction of the Dos Bocas refinery in the southern state of Tabasco, with an estimated investment of 8,000 million dollars.

“All this can take time, it may take three years, six years, but we leave the new governments a possibility of exploitation in the future,” said López Obrador.

For his part, Pemex's new director Octavio Romero said that the company is “very clear” about AMLO's mandate: to “rescue the most important company in the country to become a new account in the lever of national development ensuring the security and energy sovereignty.”

However, in the short term, the Mexican government expects the production and export of national oil to fall during 2019. The Ministry of Finance and Public Credit (SHCP) estimated that the average Mexican oil production will be 1,847 million barrels of crude oil per day, 2,000 barrels less than the 2018 average, according to its public finance estimates.