(Corrects to 2009 in para 9)
* New exploratory wells down 45 pct in first half
* Pemex attributes fall to reduced gas exploration
* Only 18 of 34 wells planned for first half completed
By Robert Campbell
MEXICO CITY, July 29 Mexico's state oil company
Pemex has this year drilled the fewest wells in search of new
crude and natural gas reservoirs since 2001, raising doubts
over its drive to sustain production as major fields age.
The world's No.7 oil producer neglected exploration for
years but has been forced to step up efforts since 2004 as the
natural decline of its aging giant oil fields threatens the
stability of government finances.
Pemex [PEMX.UL] has been improving exploration in recent
years but still does not yet find enough new oil and gas
deposits to replace what it produces every year.
But in the first six months of this year, drilling has
fallen sharply, ending a three-year increase.
The company started 19 probes over the first six months of
2010, down from 34 a year ago, and it has only completed 18
wells, far short of the 34 called for in its official 2010
operating plan, according to government data.
Pemex told Reuters the decline in exploratory drilling was
due in part to a decision, rooted in lower prices, to reduce
the number of probes dug in search of natural gas, as well as a
new focus on drilling in its traditional operating areas.
But industry observers note that the number of oil
discoveries has declined this year, putting at risk Pemex's
goal of bringing online new production to offset declines
elsewhere and helping the company's bottom line.
"It's no surprise they're finding less. Fewer wells equals
fewer discoveries. They need to drill more if they are going to
meet their goals," said an industry source who declined to be
identified due to an ongoing working relationship with Pemex.
Six wells have found oil this year, down from 10
discoveries in the first half of 2009, according to government
The decline in exploratory drilling comes as Pemex's
overall strategy appears to be in flux.
A member of the company's board of directors told Reuters
earlier this month that efforts were being refocused back to
parts of Mexico were Pemex had the most experience: the shallow
waters of the Gulf of Mexico and onshore areas nearby.
Pemex said increased exploration in these traditional areas
would mean slower, but more certain results, with significant
finds such as Ayatsil and Tsimin breathing new life into what
was thought to be mature basins.
"Drilling and completing wells in these areas can take and
cost 10 to 20 times as much as wells in the gas basins of
Burgos and Veracruz," Pemex said in a statement.
The slowdown in exploration comes as Pemex is also sharply
reducing the number of rigs digging production wells at
existing fields amid a broad strategic rethink.
The company is not renewing the contracts of rigs drilling
at its controversial multibillion-dollar Chicontepec project,
where poor results have forced Pemex to back down from its
previously ambitious goals for the area.
The number of rigs operating in Mexico fell to 130 in June,
the most recent month of data available, down from a peak of
184 achieved as recently as September. The bulk of the decline
has been in Pemex's northern region, where both Chicontepec and
its major onshore gas fields are located.
(Reporting by Robert Campbell; Editing by Marguerita Choy)