Mexican production continues downward spiral

Mexico's state-owned Petroleos Mexicanos said that during January-August 2008 its production of crude oil fell to 2.83 million b/d or 9.7% while exports dropped 16% compared with the same period in 2007.

Eric Watkins
Oil Diplomacy Editor

LOS ANGELES, Sept. 26 -- Mexico's state-owned Petroleos Mexicanos said that during January-August 2008 its production of crude oil fell to 2.83 million b/d or 9.7% while exports dropped 16% compared with the same period in 2007.

Natural gas production, however, was 6.776 bcfd, up 14% over the first 8 months of 2007. In August alone, natural-gas production rose slightly to 6.968 bcfd, up from 6.902 bcfd in July and 5.942 bcfd in August, 2007.

The decline in the country's production of crude oil was led by its largest field, Cantarell, which dropped 29.2% to 1.11 million b/d, while output at the second-largest field, Ku-Maloob-Zaap fell 39% to 688,800 b/d.

For August alone, Mexico's crude oil production slid to 2.76 million b/d due to the decline in overall production and to temporary production glitches.

August production was down from 2.78 million b/d in July and 2.84 million b/d in August, 2007, Pemex said. Production figures for August were the lowest monthly numbers since November 1995.

Mexico exported some 1.44 million b/d of crude during the January-August 2008 period, down from 1.71 million b/d sold in the same period last year. However, due to soaring oil prices, Pemex earned $34.38 billion from exports, or about 51.4% more than in 2007.

August exports stood at 1.42 million b/d, up slightly from July, but down from 1.63 million b/d in August 2007.

Mexico President Felipe Calderon has proposed giving Pemex broad financial and managerial autonomy and exempting the state-owned firm from some government rules on procurement and outsourcing.

While Calderon insists he has no intention of privatizing Pemex, some contend the bonuses the company would be permitted to offer private contractors represented a disguised form of profit-sharing aimed at opening the door to privatization.

The administration is focusing on the search for deepwater oil in the Gulf of Mexico near areas where the US and Cuba are already exploring.

The government recently presented an analysis which concluded that the decline in production at Cantarell, Mexico's largest oil field and located in the Sound of Campeche, was costing Pemex $10 billion/year.

The study said production at Mexico's main oil fields would fall by 800,000 b/d by 2012, with the drop in output reaching 1.5 million b/d by 2018.

Contact Eric Watkins at hippalus@yahoo.com.

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