KUALA LUMPUR (March 15): Petroliam Nasional Bhd (Petronas) has confirmed that it is scaling back its operations in Mexico by exiting eight offshore exploration blocks there.

Its president and group chief executive officer Tan Sri Tengku Muhammad Taufik Tengku Aziz said the decision is part of the group's regular portfolio consolidation exercise.

"As you are aware, our Mexican operations [is conducted by] our wholly-owned subsidiary PC Carigali Mexico Operations SA de CV (PCCMO), and we made a decision to exit eight exploration blocks — these are located in offshore Mexico," he told reporters at a media briefing on Friday.

"The decision to exit was made after [a] very thorough review of our exploration activities and also commercial outlook, so it's not just the success of [discoveries] but also whether it is commercially [viable] to develop. This approach is required given the very volatile and very cost-challenging oil and gas industry landscape," Taufik added.

Petronas, through PCCMO, has so far made two deepwater oil discoveries in Mexico from the Polok-1 and Chinwol-1 exploration wells in Block 29, located in the Salina Basin, offshore Mexico.

Prior to exiting the eight exploration blocks, Petronas held interest in 10 exploration blocks covering about 22,000 sq km across Mexico’s three main basins. PCCMO was the operator of five of these blocks.

International media reported in January that Petronas was scaling back its Mexican operations after disappointing high-impact exploration drilling that failed to discover the hoped for hydrocarbon riches. A month before that, it was reported that Petronas had terminated some 80% of its administrative employees, technical staff, managers and directors in Mexico.

Taufik, however, did not confirm which of Petronas' assets in Mexico that the group will be disposing of.

Petronas executive vice president and chief executive officer of upstream business Datuk Adif Zulkifli said Petronas, through PCCMO, will continue to work with its partners to see how far they can develop the two discoveries in Mexico, and will decide later if Petronas will eventually exit the market.

"Eventually, I think we will have to decide again to what extent this scaling down of activities [in Mexico] will be and if it eventually leads to an exit. We will have to decide at that point in time," he added.

Read also:
Petronas posts lower FY2023 earnings as 4Q profit drops 32%, plans RM32b dividend for FY2024
Petronas to learn how to develop offshore wind energy from Gentari's investment in Hai Long, says CEO
Petronas sets capex at RM50b-RM60b for FY2024
Petronas CEO sees oil price 'correction' in 2024
LNG Canada to make first shipment by the end of this year, says Petronas CEO