Mexico Finance Ministry Cuts Estimates For Oil Exports By 18%, Production Down To 1980s Levels

[hatrack]

MEXICO CITY, April 2 (Reuters) - Mexico's finance ministry expects the country's crude oil exports to decline by 18 percent in 2010, implying that crude oil production will fall below 2.5 million bpd next year, according to a report delivered to Congress on Wednesday night. The finance ministry estimated oil exports would drop to 1.125 million bpd in 2010 from 1.370 million bpd forecast for this year.

With no major additions to domestic refining capacity forecast for 2010, the projection implies that crude oil production will fall by approximately 245,000 bpd in 2010 to levels not seen since the late 1980's.

Mexican oil exports are already under the 1.370 million bpd target forecast for 2009 by the finance ministry. Crude exports over the first two months of 2009 averaged 1.315 million bpd, according to state oil company Pemex.

Pemex has struggled to contain the decline of the giant Cantarell oil field, once its crown jewel, which has lost nearly two thirds of its production capacity since peaking at over 2 million bpd in 2004.

EDIT

http://uk.reuters.com/article/oilRpt/idUKN0225568120090402

[phantom power]

1. This is going to place a limit on any future economic recoveries.

[hatrack]

2. Doesn't grab the headlines as heavily armed drug gangs do, but potentially far more damaging

Cantarell once provided about 60% of PEMEX's oil, and since PEMEX supplies about 40% of the state's revenue . . . .

[phantom power]

4. I have a feeling it would only help the heavily armed drug gangs.

This is going to impact anybody's economic recovery. Theirs, ours, any other country.

[On the Road]

3. What About the Newly Discovered Reserves

in the Gulf of Mexico?

http://news.bbc.co.uk/2/hi/americas/4808466.stm

I guess they may take some time to develop.

[NickB79]

5. It may never be developed

It's under 0.6 miles of water and 2.5 miles of mud and rock. The developmental costs would be astronomical, and the oil produced would have to be sold for well over $100/barrel to be economical.

[Finishline42]

8. Just a couple points to clarify - First the field is considered a failure

Just a couple points to clarify - your reference was from March 2006. Pres Fox's statements were not based on tests on the field - Noxal 1 - according to this article - the field is considered a failure.

http://www.gasandoil.com/goc/news/ntl84194.htm

Second, the Jack field that Chevron is developing in the Gulf is under 20,000 feet of rock beneath 7,000 ft of water. While developmental costs for this field are high, new large fields are still cheaper than trying to maintain production in peaked out fields.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a2PzS4ei4n84&refer=home

But the main point of the post - the dramatic decline in output from the oil fields in Mexico still stands, and as others have pointed out, ominous implications for the future of the Mexican Govt.

[XemaSab]

6. .

:popcorn:

[Javaman]

7. The Mexican government relies heavily on the revenues from their oil production...

and since nationalization of the countries oil is written in to their constitution, it will be very interesting to see how Mexico attempts to balance their budget with such a massive short fall in oil income.

I have been predicting for a long while now, and not because of the flash over excuse of a "drug war" that Mexico is head straight for a popular uprising.

We got a little peak last year when they raised the price of corn and the poor in Mexico went ape shit and staged marches and riots.

so in a desperate attempt to fix their already shaky economy, they raised taxes. People got pissed, but didn't riot as much.

As their major oil fields collapse, the money to run the government and fund the crooked politicians has to come from some where.

My belief is that the current "war on drugs" is nothing more than a territorial war between the government not getting their cut of the drug funds and the drug cartel realizing that the government is slowly becoming a paper tiger.

Hence, the new "alarm" by the Mexican government. And how the border towns with the US are threatened. Such a laugh. so one has to ask ones self: did the drug cartel bring the war to the border or did the government of Mexico bring the war to the border?

Because, if anyone as been paying attention, there has been a drug war in Mexico's interior for many years.