Analyst: Mexico unlikely to cut oil production
A Simmons & Co. International analyst doubts Mexico actually will cut its oil production despite an official announcement the country will cooperate with the Organization of Petroleum Exporting Countries' production cut.
HOUSTON, Mar. 23�A Simmons & Co. International analyst doubts Mexico actually will cut its oil production despite an official announcement that the country will cooperate with the Organization of Petroleum Exporting Countries' production cut.
Mexico's Energy Secretariat Friday announced exports will be reduced by 40,000 b/d as of Apr. 1 in response to the Organization of Petroleum Exporting Countries' cut.
"I would not anticipate much, if any, actual physical cut," Dan Pickering of Simmons told OGJ Online Friday. "It's very difficult to read the tea leaves with Mexico. They are trying to keep everyone happy."
On Thursday, Petroleos Mexicanos Director Gen. Raul Munoz told reporters in Mexico City that the slowing US economy would influence the decision, which was made by Mexico's Energy Ministry rather than the state company.
OPEC has announced plans to cut production by 1 million b/d starting on Apr. 1 to buttress crude prices as global demand is expected to decline (OGJ Online, Mar. 17, 2001).
Non-OPEC Mexico often has worked in tandem with OPEC on oil production increases or decreases. But Mexico did not follow the cartel's first cut of the year, which was agreed upon Jan. 17 and effective Feb. 1.
Mexico attended this month's OPEC meeting in Vienna as an observer, as did Russia, Oman, Angola, and Kazakhstan. All have indicated their support for cutting their individual production levels in support of OPEC.
George Baker, petroleum analyst and director of Mexico Energy Intelligence, an industry newsletter service, said Mexico is taking a more cautious approach than in previous years, when Mexico, Saudi Arabia, and Venezuela collaborated on what they believed were appropriate production levels.
"They are being more of a follower. They are doing this to see what is going on with President Bush. They want to see the lay of the land in US-Mexican relations," Baker said.
In 2000, Mexico produced 3.5 million b/d of which the US imported 1.4 million b/d, US Energy Information Administration statistics showed.
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