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Mexican oil production falling fast

February 23rd, 2009 · 1 Comment

The International Energy Agency recently published a large field by field study. The big, cheap existing fields are declining almost 5% on average. Here is one of them, the third largest oil field in the world. And it has nothing to do with falling demand..

Pemex’s Cantarell Drops at Fastest Rate in 14 Years (Update2)
By Andres R. Martinez and Carlos M. Rodriguez

Feb. 20 (Bloomberg) — Petroleos Mexicanos, the state-owned oil company, said crude output fell 9.2 percent in January as its largest field plunged at the second-fastest rate ever.

Production dropped to 2.685 million barrels a day, from 2.957 million barrels a year earlier, Pemex, as the Mexico City- based company is known, said today in a statement. Pemex extracted 772,000 barrels a day from Cantarell, the world’s third-largest field, a decline of 38 percent from a year earlier.

“If the question is, what is Pemex going to do in the short-term to prevent the falling production?” George Baker, a Houston-based energy consultant who publishes the newsletter Mexico Energy Intelligence, said in an interview. “I’m afraid the answer is nothing.”

President Felipe Calderon and Pemex Chief Executive Officer Jesus Reyes Heroles are meeting with oil executives including BP Plc to discuss hiring them to help find new crude deposits. Mexico’s state oil company is seeking technological assistance to drill in complex fields to offset Cantarell’s decline.

Pemex may have missed out on $20 billion potential oil sales in 2008 as plunging output coincided with record crude oil prices, the Mexican Energy Ministry has said. Pemex extracted less oil for a fifth year in a row because of Cantarell’s drop.

Pemex’s Ku-Maloob-Zaap field in the Gulf of Mexico achieved output of 787,000 barrels a day in January to become Mexico’s most productive oil field, the company said.

The better-than-expected result from Ku-Maloob-Zaap is not enough to offset the daily falling production from Cantarell,” Baker said.

Exxon, BP Meetings

Since January, Calderon and Reyes Heroles have met with oil producers including Exxon Mobil Corp., Chevron Corp., Royal Dutch Shell Plc and Eni SpA.

Pemex would hire the companies under new contracts that may be rolled out by July. The companies wouldn’t be allowed to book the oil they discover.

Cantarell was the third-largest field in the world when it begin producing oil offshore Mexico in 1979. Cantarell’s output fell 45 percent in October 1995 after Hurricane Roxanne shut wells in the Gulf of Mexico that month.

Pemex’s natural-gas output rose 8.5 percent to 7.091 billion cubic feet in January.

Pemex sold its mix of crude for export at an average $37.65 per barrel in January, 53 percent less than a year earlier. It sold 1.366 million barrels of crude abroad a day that month, 4.7 percent fewer barrels than a year ago.

Tags: Commodities · Natural Gas

1 response so far ↓

  • 1 Commodities » Mexican oil production falling fast // Feb 23, 2009 at 10:57 am

    […] Bear Market Investments wrote an interesting post today onHere’s a quick excerptThe International Energy Agency recently published a large field by field study. The big, cheap existing fields are declining almost 5% on average. Here is one of them, the third largest oil field in the world. And it has nothing to do with falling demand..Pemex’s Cantarell Drops at Fastest Rate in 14 Years (Update2) By Andres R. Martinez and Carlos M. RodriguezFeb. 20 (Bloomberg) — Petroleos Mexicanos, the state-owned oil company, said crude output fell 9.2 percent in January as its largest fie […]