Production from Mexico’s Costero project has been on the slide since peaking in 2011, despite the field being an important asset of the Macuspana-Muspac region and accounting for 27% of the area’s total hydrocarbon production.

The distressed financial situation of the field’s operator, Pemex Exploracion y Produccion, is adding to troubles of the project, says a report by GlobalData.

Titled ‘Mexico Costero Project Panorama – Oil and Gas Upstream Analysis Report‘, the report mentions that the field has witnessed a steady drop in production, mainly of condensate, as state-owned oil company Pemex has not upgraded the project’s infrastructure.

Liquid production has been falling, while gas production is reaching a plateau level owing to the drilling of two producing wells in 2015 and one in 2016. Pemex is yet to act on the decreasing reservoir pressure to sustain the current levels of production and also to mitigate the declining liquid production.

A development plan was proposed in this respect in 2013 to install a new modular battery to reduce the head pressure from 1,565psi to 427psi and increase the flow. The plan also outlined development of a neighbouring field, Ribereno, and to tie-back Costero to its facilities.

No affirmative action has yet to be taken on the proposed plan, and the ownership of Ribereno was also given up in 2014. No contracts have been awarded yet for installation of new field infrastructure.

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The project’s remaining net present value (NPV) is estimated to be $6m at the present 10% discount rate and the existing fiscal terms for the National Oil Company.

It is estimated to increase to $164m under the new royalty and tax regime, coupled with an additional 60% royalty assumption. A 10% rise in oil and gas prices will further increase the remaining NPV by 275%, making it even more profitable for Pemex Exploracion y Produccion, says the GlobalData report.