Pemex, with the policy of increasing its crude production, has increased its activity in large condensate fields –a very light type of crude– and gas, and by prioritizing the production of the former and not having the infrastructure to process the latter, it has increased the amount of gas it decides to burn, although the most recent figures –for the first half of this year– already speak of a setback in these latest figures.
How much gas does Pemex burn?
In 2022, the state oil company burned an average of 449 million cubic feet per day, up from 178 million cubic feet in 2018, according to its own reports. World Bank figures indicate an even bigger burn. The agency estimates that the country burned 548 million cubic feet of gas per day last year. The disparity in the reported numbers occurs because the latter also takes into account the gas burned during the production of the hydrocarbons that Mexico imports from abroad.
The World Bank has classified Mexico as one of its “cases of concern” after gas flaring in the country reached a record level in 2021. The international organization has found an explanation for the sharp increase in Mexican production figures: it says that the country has increased its activity in wells, gas is flared due to lack of infrastructure, and that in the offshore region Pemex is using high amounts of nitrogen to the artificial lifting of crude which results in the production of gas with high levels of nitrogen, which cannot be processed due to this characteristic.
“Mexico’s focus in recent years has been energy security, however the increase in gas flaring has occurred while Mexico has also steadily increased imports of natural gas, highlighting the potential recovery from gas flaring could play in their energy independence”, he says in one of his reports.
Mexico and Pemex have climbed in the ranking despite the fact that the figures indicate an annual decrease in the burning of hydrocarbons – of around 13% last year – because the rest of the oil companies have also decided to increase their actions to avoid burning at as pressure builds to prevent an even greater rise in global temperature.
Nigeria and the United States fell in the World Bank list, thus making room for Mexico to rise in the ranking. The agency says that during the past year gas flaring decreased globally by 3% despite a 5% increase in crude oil production. However, he exemplifies, “the world still burns enough gas to generate approximately two thirds of the net domestic electricity generation of the European Union.”
Pemex has turned gas flaring into one of the main points in its relationship with investors. For the latter, the management of environmental risks has added importance and has become one of the main metrics to measure the risk of a company. In its last conference on its financial results, the state company spoke of a 17.6% decrease in carbon dioxide equivalent emissions during the first semester derived from “infrastructure projects to increase the use of gas.”
The markets do not have much confidence in the actions of the oil company, especially derived from the latest incidents at its facilities. But monitoring by the World Bank indicates a decrease in gas flaring at the Cactus complex in Chiapas and at Perdiz, in the Ixachi field, in Veracruz. The second – located in what Pemex considers to be one of its most important assets – was ranked last year as 36th of the “individual gas flaring sites” worldwide, a year earlier it was ranked 10th. .
“This wasted gas (globally) could displace the dirtiest energy sources, increase energy access in some of the world’s poorest countries, and provide many countries with much-needed energy security. If used for productive purposes, the amount of gas flared in 2022 could generate as much electricity as sub-Saharan Africa currently produces in a year,” says the World Bank.