Pemex Bets on Reactivating Old Wells to Reverse Production Decline

Mexican state oil company Pemex has launched a strategy to reactivate hundreds of closed wells as it struggles to meet ambitious government production targets.

The plan aims to boost declining output that has reached its lowest level in over four decades, according to internal documents and industry sources. Pemex currently produces approximately 1.6 million barrels per day (bpd), well below the government’s target of 1.8 million bpd.

The company recently acknowledged in a U.S. Securities and Exchange Commission filing that production will likely fall to 1.58 million bpd this year.

Angel Cid Munguia, head of Pemex‘s exploration and production division, confirmed in a May 6 internal document that the company is advancing with the “reactivation of closed wells.” The initiative focuses on reopening approximately 400 of Mexico’s 31,000 total wells by the end of 2025.

The company expects these reactivated wells to contribute about 13,000 barrels per day by December 2025. This project requires an investment of 1.5 billion pesos (approximately $73 million) and involves contracting private companies to handle investment, engineering, procurement, and operations.

Pemex Struggles to Reverse Output Decline

Pemex’s production has declined steadily for years as its mature fields in the Gulf of Mexico deplete. New fields have failed to compensate for these losses. The first quarter of 2025 saw production fall by 11.3% year-over-year, reaching levels not seen since 1979.

The reactivation strategy coincides with historically low drilling activity. Pemex completed only 17 wells in the first quarter of 2025, the lowest for a comparable period since 1995 and less than half of the 41 wells completed a year earlier.

Financial challenges compound Pemex’s production problems. The company carries approximately $100 billion in debt, including $20 billion owed to oilfield service providers. These payment delays have forced the interruption of several projects.

President Claudia Sheinbaum‘s administration has taken steps to address these issues. Her government recently approved guidelines for Mixed Development Schemes allowing Pemex to partner with private companies while maintaining at least 40% participation in each contract.

The reactivation initiative represents a pragmatic approach to Mexico’s energy challenges as Pemex attempts to reverse its production decline while managing its substantial debt burden.

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