Mexican Oil Output May Fall to 2.6 Million Barrels (Update2)
By Andres R. Martinez and Jose Enrique Arrioja
Aug. 12 (Bloomberg) -- Mexico may pump as little as 2.6 million barrels a day of oil this year amid declines at the country’s largest field, Energy Minister Georgina Kessel said.
Production will be between 2.6 million barrels and 2.7 million barrels, Kessel said today in an interview in Mexico City. State-owned producer Petroleos Mexicanos on July 30 cut its production forecast to 2.65 million barrels a day for this year, from an earlier estimate of as much as 2.8 million.
Mexico’s output is slumping as production at Cantarell, the company’s largest field, drops at a rate twice as fast as forecast by Pemex, as the company is known. Last year, production slumped at the fastest rate since 1942.
The drop may cost the Mexican government 300 billion pesos ($23.1 billion) in lost sales this year and could lead the country to have a budget deficit in 2010, Finance Minister Agustin Carstens said yesterday.
Oil above $70 a barrel is enough to support the exploration projects Pemex has planned to boost output, according to Kessel.
“Pemex needs to maintain its current levels of investment to develop its reserves,” Kessel said. “Prices above $70 to $75 a barrel are appropriate to help develop those projects.”
Crude oil for September delivery rose 68 cents, or 1 percent, to $70.13 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange.
Mexico faces the greatest “fiscal shock” in 30 years as output may fall to 2.5 million barrels a day next year, creating a budget deficit, Carstens said.
Oil Funding
Oil revenue funded about 38 percent of the government’s budget last year. Prices have fallen more than 50 percent since a record high last year of $147.27 a barrel.
Kessel will meet with Brazilian Energy Minister Edison Lobao this weekend and visit a technology center run by Petroleo Brasileiro SA to discuss ethanol projects and deepwater oil exploration, she said today.
Mexico has said that it holds 30 billion barrels of oil equivalent under water deeper than 500 meters (1,640.5 feet). Pemex wants to partner with companies such as Petrobras, Exxon Mobil Corp. and Chevron Corp. to develop its deepwater reserves.
So far, the company has drilled 10 wells in deepwater on its side of the Gulf of Mexico. Pemex expects to produce its first deepwater natural gas by 2013 and oil by 2015.
To contact the reporter on this story: Andres R. Martinez in Mexico City at amartinez28@bloomberg.net; Jose Enrique Arrioja in Mexico City at jarrioja@bloomberg.net
Last Updated: August 12, 2009 16:26 EDT
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