Thursday, February 01, 2007

Mexico - Cantarell crashing (Peak Oil Review [ASPO-USA], Mon 29 Jan)

No link, from ASPO-USA’s weekly Peak Oil Review newsletter.

This story was reported in yesterday’s newsletter, but POR does an excellent job of summing the info available/consequences:

On Friday PEMEX made it official. Production from Mexico 's largest oilfield, Cantarell, fell from 1.99 million b/d in January 2006 to 1.44 million b/d in December. The company's overall crude production in December was 2.98 million b/d, falling below 3 million barrels for the first time in six years. Nearly a year ago, a leaked internal PEMEX study forecast that under the best-case scenario Cantarell's production would fall to 1.54 million barrels a day by the end of 2006 -- almost exactly what happened.

Mexican oil analyst, David Shields, expects the field's output to drop another 600,000 barrels a day by the end of this year. He says that Pemex will likely increase output by 200,000 barrels a day at other fields -- leaving the country with a net decline of 400,000 barrels a day by year's end.

The sudden crash of production from Cantarell has serious implications for the US and Mexican economies. Mexico derives 37 percent of its federal budget from PEMEX's profits. Last year, revenue from the nation's crude exports reached an all-time high of $34.7 billion. In 2005 Mexico exported 1.82 million b/d mostly to the US . By last month exports had fallen to 1.53 million b/d and will obviously continue to drop during 2007 and beyond as production drops and the growing Mexican economy continues to demand more fuel.

Mexico has already warned US crude importers that it will be unable to fulfill some existing contracts. US imports from Mexico could drop by over a million barrels a day between 2005 and the end of next year. A loss of this magnitude will be very difficult and probably expensive to make up through purchases on the international market.

OIL-MEXICO: Severe Withdrawal Symptoms Ahead (IPS, Thu 25 Jan)

Mexico is as addicted to oil as heroin addicts are to their next fix: the country depends on oil for a large proportion of its energy needs, consumes it at an unsustainable rate and goes into debt to obtain it. Unless it changes its behaviour or finds a therapy that works, the prognosis is that it will experience a serious crisis.

The problem is enormous, analysts told IPS. Mexico produces 3.3 million barrels per day (bpd) of crude, making it the sixth world producer; it exports 1.8 million bpd, and owns one of the 10 largest oil companies, the state monopoly Petróleos Mexicanos (PEMEX) -- but it is teetering on the edge of an abyss, they said.

Local oil reserves are expected to last only nine years and eight months at current rates of production, according to precise calculations by experts, whereas in 2000 they were forecast to last 20 years and seven months. Besides, PEMEX is bankrupt.

PEMEX has debts greater than its total assets, is undertaking very little exploration, its extraction costs are rising steadily, and most of its revenues go straight into the state coffers to finance 36.1 percent of the national budget, twice the proportion that it contributed 20 years ago...

Mexico - Latest Total oil Supply (production) from IEA(International Energy Agency, 13 Dec 2006)


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