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PEMEX: Perspectives and main Challenges Nov 6, 2008.

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Presentation on theme: "PEMEX: Perspectives and main Challenges Nov 6, 2008."— Presentation transcript:

1 PEMEX: Perspectives and main Challenges Nov 6, 2008

2 1 Results and evolution Main challenges Content

3 2 Pemex at a glance International National Operating statistics 2007 (2) Sales (USD bln) Sales as % of Mexicos GDP % Exports (USD bln) Exports as % of current account revenues % Tax contributions (USD bln) Tax contribution as % of federal government revenue % Production Oil (Mln b/d) Gas (bcfd) Crude oil refined (Mln b/d) Petrochemicals (Mln Tones) Domestic sales: Transportation fuels (Mln b/d) Natural gas (bcfd) Oil exports (Mln b/d) Employees (thousands) th oil and gas company worldwide(1) 3rd in oil production 11th in oil reserves 14th in gas production 13th in refining capacity 33th in gas reserves 1.According to rankings by Petroleum Intelligence Weekly, December Current dollars.

4 3 Pemex: Crude oil and natural gas production Sustained total production since 2004 Crude oil production has decreased since peaking in 2004 Increased natural gas production since 2003 Total Hydrocarbon Production, (Mln boed)

5 4 (1) As of December 31 of each year Crude oil and natural gas reserves Total reserves (1), (Bln BOE) Proven Probable Possible 13 reserves/production (years) Higher reserve replacement ratios are required to sustain current reserve levels

6 5 Construction of deep conversion units has improved margins at Madero and Cadereyta by increasing distillate yields and processing heavier crude mixes Gas processing units were built to handle the increasing production from Burgos Petrochemical operations are focused on the most profitable chains: ethane and aromatics Oil products, gas and petrochemical production Product Yields – SNR (%) Crude run - SNR (Mln bd) Gasoline Intermediate Distillates Fuel oil 100% = Light Heavy Petrochemical sales (Bton/y) Gas production (Mln cfd) 5,097 3,

7 6 Results and evolution Main challenges Content

8 7 Sustain crude production above 2.8 Mln b/d by Seek new opportunities to increase the production level above 3.0 Mln b/d in the long term Maintain gas production above 6 bcfd 100% reserve-replacement ratio by 2012 Maintain long term reserve/production ratio above 9 years Residual conversion in all existing refineries & the new capacity (reduction of gasoline imports) Close safety and reliability gaps Reduce environmental liabilities Enact crucial operational upgrades Close efficiency gaps through operational improvement programs Main goals

9 8 Manage depletion rate of mature fields Develop low-permeability fields Implement enhanced recovery methods Develop Burgos and Veracruz basins to increase non-associated gas production Implement best practices in project management Maintain a proved reserve life above 9 years and reach replacement rate of 100% by 2012 Explore deepwater and sub-saline prospects Exploitation Exploration Balanced exploitation strategy to sustain production Other Exploitation Projects Other exploration Chicontepec Cantarell Crude oil production (Thousand barrels per day) KMZ Chicontepec Cantarell Other exploration Natural gas production (Million cubic feet per day) Other Exploitation Projects Deep water Deep water Burgos Average: 2,884 Average: 6,649

10 9 Production and reserve replacement ratio evolution (Million barrels of crude oil equivalent) Enforcement SEC´s guidelines 3P reserves Only discoveries 1P Reserves. Includes additions, development and revisions Additions Production Additions 2008: 1,053 Mln boe 66% 57% 14% 45% 37% 4% 53% 50% 12% 23% Additions from existing projects 100%

11 10 55% of prospective resources are found in the deep waters of the Gulf of Mexico 34% are located in Southeast Mexico, where PEMEX currently has a large amount of its operations Sabinas0.6%0.3 Burgos5.8%3.1 Tampico-Misantla3.1%1.7 Veracruz1.5%0.8 Sureste33.6%18.1 Golfo de México Profundo54.8%29.5 Plataforma de Yucatán0.6%0.3 1.As of December 31, As of December 31, Stochastic addition, results may vary from an algebraic addition Mexicos untapped resource potential 3P Reserves, (Bln BOE)(1): Total prospective resources (Bln BOE)(2): Basins Prospective Resources (2 ) (Bln BOE) As a % of Total Prospective Resources

12 11 In recent years Mexicos demand for automotive fuels has grown above the GDP while production capacity has stagnated. It is expected that this trend on demand will continue in the future. On the other hand, fuel oil demand has decreased due to substitution with natural gas for power generation. Refining growth challenges Cadereyta Salamanca Salina Cruz Minatitlán Madero Location under study Tula Fuel quality & residual conversion Fuel quality New capacity Main projects Gasoline demand (T b/d) Current production + projects under construction 523 T b/d Current production 458 T b/d 14%40%44%48% Part. of imports With projects under construction 14%40%30%20% With new projects

13 12 Deep conversion projects at Minatitlán, Salamanca, Tula & Salina Cruz New refining capacity Increase refining margin through deep conversion projects (coking) over national production of heavy crude oil Additional refining capacity to face growing demand, based on national availability of heavy crude oil Increase imports capacity and strengthen storage and distribution Increase storage and distribution capacity to satisfy domestic demand Ultra low sulfur fuels (NOM-086) Modernization of existing units and construction of new plants to meet ultra-low sulfur fuels standard Refining Investment Priorities

14 13 Natural Gas and Petrochemicals Strategies Increase process infrastructure according to primary production (sweetening, NGL recovery, liquid fractionation, and sulfur recovery). Capture the benefit associated with rich gas production (non associated) in the Northern Region Increase transport capacity as required by production and demand Encourage private sector participation in transport and storage Diversify supply sources and analyze participation in LNG projects Focus on most profitable chains and retrieve from non profitable ones: Encourage participation of private sector to develop new projects and capture business opportunities in selected chains Increase efficiency and debottlenecking of profitable chains Divest nonprofitable and marginal chains Petrochemicals Natural Gas

15 14 Pemex Strategic lines Pemex strategy focuses on value maximization and sustainability, involving positive financial results in every business unit, through four strategic lines: Operational efficiency Social responsibility Management Growth Close efficiency gaps in all operations Improve reliability and productivity Excel in investment project planning and execution Develop human resources Strengthen environmental protection, industrial safety and physical security Develop healthy relationships with Stakeholders : Communities where Pemex has operations Clients and suppliers Government Implement new regulatory framework Improve Corporate Governance Strengthen business oriented culture to improve performance Discover and develop new reserves Sustain oil and gas production levels Build Downstream and Logistics infrastructure to meet market opportunities, demand growth and environmental standards

16 15

17 16 Energy Reform: benefits Deregulation / new operational flexibility New budgetary flexibility More latitude in contracting debt Gradual use of companys profits Increase legal certainty New contractual models for high complexity projects New modalities for contracting construction and services The energy reform represents an answer to diverse aspects of Pemexs problems providing several benefits:

18 17 Envisages a smooth transition that will not be a shock to public finances and will not threaten short-term production and product supply Energy Reform: benefits Strengthening of the Board Independent members Creation of committees - More effective oversight Citizen bonds - market accountability More accountability and transparency Improved corporate governance Chicontepec, deep waters, abandoned fields New fiscal adjustments for strategic projects

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