Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: big guy who wrote (39661)	3/2/2005 9:43:41 PM
From: big guy	Respond to of 206209

Pemex Says Cantarell Field to Begin Decline in 2005 (Update4) March 1 (Bloomberg) -- Petroleos Mexicanos, Mexico's state oil monopoly, said it expects production at its largest oil field to decline this year, earlier than previously forecast, and plans to boost investment by more than $1 billion from 2004 to make up for the shortfall at other fields. Cantarell, which accounted for more than 60 percent of oil production last year, will produce an estimated 2.02 million barrels of oil in 2005, down from 2.11 million barrels per day in 2004, Vinicio Suro, planning director for Pemex's production and exploration unit, said on a conference call with investors. ``That means that we're going to begin the decline of production in Cantarell by around 80,000 or 90,000 barrels of oil'' per day, Suro said. Pemex plans to invest as much as $11.5 billion this year, up from $10.1 billion in 2004, to boost production in other fields, including exploration of deep-water deposits for the first time, to make up for the Cantarell decline. Pemex has doubled its debt in four years to $45 billion to finance annual investments of about $10 billion. The company will take on $4 billion of new debt this year to finance investments, said Octavio Ornelas, director of treasury financing on the call. Pemex plans to get financing in the foreign and domestic bond markets and from bank loans, said Juan Jose Suarez, the company's chief financial officer. Last year, Pemex produced 3.38 million barrels of oil per day, up 0.3 percent from 3.37 million barrels in 2003. `Glory Ride' The Mexican government collected 60.8 percent of Pemex's $69 billion of revenue in taxes last year, causing the company to have a net loss of $1.3 billion pesos. The taxes, which fund a third of government spending, leave Pemex with little cash to invest in new production and halt a reduction in reserves of more than a decade. The decline in Cantarell, which kicked off Mexico's oil boom with its discovery in the late 1970s, is earlier than Pemex predictions of it starting in 2006, said John Padilla, director of IPD Latin America, a Houston-based energy consultant firm. ``There's only one Cantarell,'' Padilla said in a telephone interview. ``It's been a 30-year glory ride that has single- handedly built the modern Mexican state.'' Pemex began pumping nitrogen in Cantarell, a 162 square- kilometer field in waters about 60 meters deep in the Gulf of Mexico, since 2000 to increase pressure in the field and prolong its life. Ku-Maloob-Zaap The company will increase overall oil production in 2005, overcoming Cantarell's decline, by boosting output mainly from its from its Ku-Maloob-Zaap complex and light marine crude field, Suro said. ``We are continuing to develop plans in order to increase production and in order to retain our capacity to increase our production,'' Suro said. The smaller fields Pemex is tapping may not be enough to make up for the output reduction in Cantarell, which is forecast to decline at rates of more than 10 percent in later years. ``It will take a lot of small efforts to replace the production they're losing from a big field like Cantarell,'' Padilla said. Pemex has just begun to explore for oil in waters 500 meters and deeper that could double the company's reserves and may take year to develop them, Padilla said. Suro said Pemex replaced 57 percent of reserves that it produced last year, including proven, probable and possible reserves. None of those reserves are in deep water, he said. The U.S. Securities and Exchange Commission only recognizes proven reserves. bloomberg.com