Mexico's Coming Oil Crisis

Friday, January 05, 2007

January 23
A presentation by Larry Walker
Madison, WI - Exact location will be posted here as soon as it's determined.
7:00 p.m.

Mexico's Cantarell oil field is about to play out a classic peak-and-rapid-decline scenario over the next 3 years. This will pose special challenges for Mexico's government, its national oil company Pemex, the U.S., and the world oil market.

Sponsored by Community Action on Latin America.
In English with Spanish translation.
More information from Carol Bracewell.


Ed Blume said...

An exchange between posters on The Oil Drum included this news on the huge Mexican oil field Cantarell:

PEMEX WILL MAINTAIN PRODUCTION FROM MULTIPLE SOURCES [translator's best guess for a colloquialism]

It will produce 700 Mb/d less than last year


Production from Mexico's main oilfield, Cantarell, will fall rapidly from September this year.

According to the PEMEX 2007 Annual Operating Plan, the development will be producing 700 Mb/d less than the maximum achieved last year, which was 2.1 MMb/d.

With the remaining level of production from Cantarell it will be possible to maintain current levels of production of gasoline - in the Magna and Premium brands - which the country consumes. However, it is equivalent to 50% of the total run of PEMEX's six refineries.

The document, which EL UNIVERSAL has obtained, states that in the fourth quarter Cantarell will be producing 1.329 MMb/d due to its accelerating decline, which will make it harder to achieve the production and export targets fixed by the federal government fot this year.

The plan, which is the driver for the Mexican oil industry, states that as of the end of January of this year the reservoir, considered the sixth largest in the world, will produce 1.723 MMb/d on average, and in December it will be delivering 1.429 MMb/d. However, not even the additional volumes from the Ku-Maloob-Zaap development, which according to ex President Vicente Fox were going to offset the decline of Cantarell, will be enough to prevent the depletion of Mexico's exploitable reserves.


Referring to the matter, Jorge Chavez Presa, the undersecretary for Energy Policy during the administration of Ernesto Zedillo, stated that it is necessary to undertake an audit of PEMEX's use of the additional resources which it received during Vicente Fox's administration, "which were much higher than its budget under the three previous administrations and which have not generated additional production or reserves, as we can see in Cantarell".

He stated that the ex president had not fulfilled his historic responsibility. "Every administration gave its successor the means to increase oil production. But Calderon inherited a declining industry".

Interviewed during the "2007 Seminar on Economic Perspectives on the Challenges for 2006-2012", organized by the Mexican Independent Institute of Technology, the professor said that there was a need for transparency and accountability in "a matter that affects us all".

"We need to know what happened to all the extra resources that PEMEX received. Was the wasted money invested under the PIDIREGAS framework? [translator's note: no idea what this is]. We need to be critical".

He explained that under Fox, institutions did not function properly, neither the State Comptroller nor the Senior Auditor, because "PEMEX had all the money in the world due to the high price of oil, and didn't know how to use it".