Mexico’s cash-strapped state oil company Pemex requested authorities allow it to lower the tax regime on its top oil field Ku Maloob Zaap (KMZ), but the company said the request was now in the process of being withdrawn.
Pemex had asked the government to place KMZ under an exploration and extraction contract to lower its taxes, sources told Reuters. They also said the request was likely to be denied.
Ku Maloob Zaap, located in the shallow waters of the southern Gulf of Mexico, is the company’s top-producing field accounting for 40 percent of Pemex’s total crude output.
Pemex expects to produce around 1.9 million barrels of crude per day (bpd) in 2017, down from around 2.1 million bpd in 2016 and well below a peak of 3.4 million in 2004.
Under Mexico’s 2013 energy reform, Pemex can change the status of its oil fields to exploration and extraction contracts, often to partner with a private company. In this case the state-run company requested the change with no partner, four sources involved in the process told Reuters.
Pemex said in a statement on Wednesday the request on KMZ was “in the process of being withdrawn.”
The company said it had decided to focus on shifting the status of fields that are profitable before taxes but that are pushed into the red by tax liabilities.
Such changes need to be approved by the energy ministry after the energy regulator, the National Hydrocarbons Commission (NHC) gives its opinion.
Later on Wednesday, the NHC issued a negative opinion on the request, saying there were inconsistencies in information provided by Pemex.
Currently the oil field is operated by Pemex under a pre-reform arrangement known as an assignment.
(Writing by Frank Jack Daniel; Editing by Chris Reese and Christian Schmollinger)