Campeche platform explosion

Pemex quick to highlight accident not caused by a lack of investment.

On 23 August, Pemex suffered the second fire in an offshore platform in the Gulf of Mexico in less than two months. The explosion in the E-Ku-A2 platform in the Bay of Campeche killed five people and left six injured. 

Pemex announced that it launched an internal investigation to understand the reasons behind the accident and will take measures to prevent future accidents. A senior energy consultant in Mexico noted, “The Agency for Safety, Energy and Environment (“ASEA”), which should be investigating the accident, have completely avoided it and left it to an internal investigation. Pemex and Mexico, can’t afford messages of operational deficiencies, the signal to the markets and rating agencies would be catastrophic.”

An industry executive shared the consultant’s concerns, “We will never know what really caused the incident. The root cause analysis will be done internally, surely by the Mexican Petroleum Institute, and the culprits will escape blame.”

“The root cause analysis will be done internally, surely by the Mexican Petroleum Institute, and the culprits will escape blame.”

Oil industry executive, Mexico

Octavio Romero, Director General of Pemex, affirmed that the fires were not a consequence of a lack of investment in the offshore platforms and emphasised that the number of incidents in these platforms was lower than those registered in previous administrations. Romero labelled the incident, “an unpredictable accident during scheduled tasks. The impact will come in less revenue from production delays and repair expenses, about USD 34 million in lost revenue per day, or about 60% of expected revenue.”

Oil sector experts disagree over Romero’s claims and said that Pemex USD 3 billion budget for infrastructure maintenance was insufficient to cover the company’s oil facilities. President Andrés Manuel López Obrador (“AMLO”) insisted that the government would continue to prioritise investments in Pemex. An oil industry executive was clear, “What we have been seeing in Campeche goes beyond isolated incidents, it is a consequence of the poor state of the oil facilities. They have inherited a declining industry but it could have been better preserved had it been properly maintained. Today, the facilities most at risk are the Madero and Minatitlán refineries, which are barely sustained and maintenance is a last resort.”

“Today, the facilities most at risk are the Madero and Minatitlán refineries, which are barely sustained and maintenance is a last resort.”

Oil industry executive, Mexico

The energy consultant commented, “The message from the top is quite clear: to achieve production goals at any cost. This puts pressure on plants that are being forced to operate under conditions that will cause breakdowns on the long run. AMLO’s administration sees this as a problem for tomorrow.”

“The message from the top is quite clear: to achieve production goals at any cost.”

Energy consultant, Mexico

As a result of the incident, the company’s production was cut by 444,000 barrels per day due to the lack of natural gas to be re-injected into crude fields that, according to Pemex, affected operations in 125 oil fields. US oil companies operating in the Gulf of Mexico are strongly dependent on Mexican oil, which accounts for 38%, of the crude used to operate their refineries. Chevron, Phillips 66 and Valero Energy Corp. are among the main importers of Mexican oil.

The environmental liability is unlikely to be addressed, according to the industry executive, “It is difficult to calculate and amortise the environmental liability when we are not even reporting emissions during ‘normal’ times. There will be no meaningful fine for environmental damage – it would just return to the state coffers anyway –  it is as if sanctions don’t exist. Things will only change if international investors and the US force the adoption of ESG criteria.”

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