Pemex is facing a critical period ahead as it seeks to reduce emissions at a time when production is climbing.
Mexico’s state-owned oil company has set ambitious new emissions-intensity goals, reflecting a renewed commitment to improve its ESG record.
The targets will see GHG intensity from oil and gas production fall sharply from 38.1 tCO2e/Mboe in 2022, down to 21.5 tCO2e/Mboe in 2025, Evaluate Energy data shows.
Pemex hopes to achieve similar intensity declines by 2025 from its refining and natural gas processing businesses.
The updated targets are an acknowledgment from the company that its ESG track record needs a refresh, partly to continue to attract affordable financing.
Pemex remains heavily indebted — in just a decade, its debt has ballooned from $64 billion in 2013 to around $108 billion — and is dependent on access to the financial markets.
In a May 2023 ESG update, the company outlined a range of specific measures it plans to take to improve its environmental record.
These include the release of a long-term Sustainability Plan for 2023-2050, expected in the second half of 2023, which will offer greater visibility and transparency into forward plans.
Other measures include a 98 per cent gas use target by 2024, up from 95 per cent currently.
Pemex has long faced criticism for its flaring, even though Mexico is among signatories to a World Bank pledge to cut routine flaring to zero by 2030.
In 2021, approximately 35 per cent of Pemex’s total Scope 1 and Scope 2 emissions came from upstream gas flaring.
On a broader strategic level, Pemex also appointed its Sustainability Committee in March to help steer the group through its ESG transformation.
At the same time, the company is seeing rising upstream production, which could make achieving its targets more challenging.
In March, liquids output reached 1.915 million bbls/d, with forecasts of 2.0 million bbls/d by the end of 2023.
Pemex is seeking to recover lost ground after output tumbled from 2012, when it stood above 2.5 million bbls/d.
The company is also scaling up refining and processing capacity in response to energy demand.
Crude oil processing capacity has similarly bounced back significantly after it plummeted by around 50 per cent between 2013 and 2018.
Major investments include the acquisition of Shell Deer Park Refining LP’s 340,000-bbl/d refinery in Texas in late 2021.
How Pemex links its updated ESG strategy into the wave of new projects being unleashed to restore and rebuild output and capacity will be key.
Woodside Energy Group’s $7.2-billion Trion development, in which Pemex holds a 40 per cent interest, could be a marker of things to come.
The recent sanctioning of the ultra-deepwater field, located in the western Gulf of Mexico, may yield some clues as to how the state-owned company will translate its goals into reality.
While first output is not due until 2028, Trion is expected to have an average carbon intensity of 11.8 kgCO2e/boe over the life of the field, according to the operator, lower than the global deepwater oil average.
The project continues a trend of replacing ageing production from mature fields with new ones.
Squeezed between high debt and the added costs of meeting ESG commitments, alongside the responsibility to meet the nation’s energy needs, cutting emissions intensity so drastically over the next two years will be a huge task.
Still, with more visible emissions targets in place, it seems as though a genuine effort is being made to get to grips with some of the many challenges faced by the company.
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