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Mexican Oil Production Declines 9.7%
According to various reports including the one posted below from the Oil and Gas Journal, Mexican oil production at Cantarell and KMZ fields declined in August by 29.2% and an astonishing 39% respectively, although bad weather may have played a role. The statistic that may sum it up best is the fact that total Mexican production for the first eight months of 2008 was down 2.83 mb/d or 9.7%. KMZ is a smaller field that produces heavy oil. The Chicontepec field is probably continuing to increase production so total Mexican declines were smaller.
Bear in mind that global decline is often estimated to total 3.5 mb/d, the rate used in my recent megaprojects analysis of predicted future supply and demand. With Mexico accounting for 80% of that number by itself, it seems likely that total global decline may be significantly greater - maybe as much as 4.5 or 5 mb/d. If that is the case, then global decline is already a substantial force working to pressure the global oil supply and oil prices are unlikely to trade much below $100 for any substantial length of time.
Mexican production continues downward spiral
Eric Watkins
Oil Diplomacy Editor
LOS ANGELES, Sept. 23 — Mexico’s state-owned Petroleos Mexicanos said that during January-August 2008 its production of oil fell by 2.83 million b/d, or 9.7%, while exports dropped 16% compared with the same period in 2007.
Natural gas production, however, was 1.77 bcfd, up 14% from the first 8 months of 2007. In August alone, gas production rose to 6.968 bcfd, up slightly from 6.902 bcfd in July of this year and 5.942 bcfd in August 2007.
The decline in the country’s oil production 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 oil production slid to 2.76 million b/d due to the decline in overall production along with temporary glitches in production.
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 number 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.
Due to soaring oil prices, Pemex earned $34.38 billion from exports, however, or about 51.4% more than in 2007.
For August, exports stood at 1.42 million b/d, up slightly from July, but down from 1.63 million b/d in August 2007.
Contact Eric Watkins at hippalus [Email address: hippalus #AT# yahoo.com - replace #AT# with @ ].
Tags: peak oil energy investments
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5 responses so far ↓
1 paultaut // Sep 23, 2008 at 8:07 pm
Can I assume you no longer believe that the $80 to $100 range is no longer tenable?
If so, are you reinstating previous positions or waiting for lower stock prices?
I have a new scenario myself. Oil will continue steadily upward with hiccups in the process. By the middle of 2009 it will hit new highs. By then the Gov. will have instituted a windfall profits tax or some such.
The Tax will be used to fund whatever they want. Who knows, another stimulus package for the still recession bound economy or further Bail Out funding.
Both Obama and McCain would be willing to do it. So, while I believe oil will continue on to $200, the benefits will be passed on to external companies.
2 jkingsdale // Sep 23, 2008 at 8:22 pm
I am less optimistic about getting oil down much below $100 and having it trade there for a sustained period. Demand should increase soon in preparation for winter. Maybe the price will come down in the spring for a while. But I would also not be surprised if your oil price scenario came to pass - but no excess profits tax under McCain. I don’t own much in the way domestic E&P’s anyway - and any U.S. tax would probably only extend to U.S. production. And yes, my allocation to cash has come down substantially - though I may be way too early.
3 paultaut // Sep 24, 2008 at 6:40 am
What will happen under McCain is S. Palin. It won’t matter what its called. Revenue sharing? Who knows. But with her in the Mix, the Oil companies will toss more into the kitty.
You may be too early but the downside is clearly limited; Iran’s breakeven is $90 while Iraq’s is $110.
Where did I get these figures, I don’t know. I was wandering around the Zawya site and hit link after link until I found these figures. The Saudi’s are $49.
Anyway, please consider that many marginal mines are closing while new mine expansions can’t find risk capital. The same with oil. This means any global expansion will trigger major spikes in commodities again.
All you can do is pick, buy and don’t worry about having picked the absolute bottom.
4 robert essian // Sep 24, 2008 at 1:47 pm
Jim, $700 billion (tip of the iceberg) bail out is a whole lot of inflation. So I agree about $100.00 oil possibly being the bottom.
Truth be known Jim I have heard all about blogging but I never knew (really) what it was. I’m starting to though…Ha! Ha!
I know this is blogging! I’ll stop now.
5 KV // Sep 24, 2008 at 2:53 pm
I have grave reservation whether we would be able to buy any oil from anywhere if the artificially created financial crisis really happens.
It is a bubble and if it blows fine with me. Why keep perpetuate corruption? Many banana republics have been through these shenanigans. They have a simple solution: inflate to a point where we can’t count the numbers and then chop off zeros at the end of the numbers and change the color of the new currency. So pink would be a good next color.
When this happens, nobody will be worried about oil, as nobody will be able to afford it.
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