Mexico's Oil Output
May Decline Sharply
Pemex Study Points to Possible Drop
At Major Field, Which Would Strain Global Supply
By DAVID LUHNOW
Staff Reporter of THE WALL STREET JOURNAL
February 9, 2006; Page A4
MEXICO CITY – Mexico's huge state-owned oil company may be facing a steep decline in output that would further tighten global oil supply and add to global woes over high oil prices.
The potential decline faced by Petroleos Mexicanos, or Pemex, also could undermine U.S. efforts to reduce dependence on Middle East oil, and complicate Mexican politics and financial stability.
An internal study reviewed by The Wall Street Journal shows water and gas are encroaching more quickly than expected in Cantarell, Mexico's biggest oil field, and might cause output to drop precipitously over the next few years. Currently, Cantarell produces two million barrels of oil a day, or six of every 10 barrels produced by Mexico. It is the world's second-biggest-producing field after Saudi Arabia's Ghawar.
Pemex, Latin America's biggest company by assets and employees, says it is confident it can make up for any decline at Cantarell by squeezing more output from other fields, but some analysts outside the company are far less sanguine.
The study, carried out last year by Pemex experts, offers a rare glimpse inside the traditionally secretive oil company. It outlines five scenarios for a decline at Cantarell, four of which are more pessimistic than the company's current public forecasts.
The worst two scenarios suggest a drastic decline in output to 875,000 barrels a day by the end of 2007 and to just 520,000 a day by the end of 2008. If such projections turn out to be correct, Mexico's overall oil exports would decline by about one million barrels a day -- equal to about 63% of its daily crude exports to the U.S. -- from its current 1.8 million. |
