Pemex reports 9.2% decline in oil production for 2008

Oil & Gas Journal ^ | Jan. 22 2009 | Eric Watkins

[thackney]

Mexico's Petroleos Mexicanos (Pemex), eyeing continued depletion at its main oil field, said the country's oil production declined by 9.2% in 2008 to just under 2.8 million b/d.

The country's level of production was the lowest since 1995, when it reached 2.62 million b/d, according to statistics from the energy ministry.

Pemex explained the decrease as due largely to continuing depletion of the country's Cantarell oil field and to Hurricane Ike, which disrupted production at offshore platforms in the Gulf of Mexico.

Pemex said the gradual depletion of Cantarell, where production dropped by 461,000 b/d to around 1 million b/d in 2008, was partly offset by increased output at the Ku-Maloob-Zaap field, which saw production averaging 702,000 b/d in 2008.

Altogether, Mexico's oil production rose in December to 2.717 million b/d from 2.711 million b/d in November, but it declined sharply from December 2007, when Pemex produced 2.954 million b/d.

Underlining a positive note, however, Pemex said that KMZ field reached a record production level of 802,000 b/d on Dec. 29, making it "foreseeable that in 2009 this field will become the primary oil producer in the country."

Optimism expressed

The Pemex statement echoed optimism expressed last month by Energy Minister Georgina Kessel who told the Mexican Senate that, with recent energy sector reforms, Pemex would produce 2.7-2.8 million b/d in the 2009-10 period—volumes near its current output.

"Beginning in 2011, a gradual increase in production will begin until we reach levels near or slightly superior to 3 million b/d in 2015," the minister said.

Meanwhile, Mexico exported 1.4 million b/d of oil in 2008, down 16.8% from 2007, but Pemex still earned a record $43.32 billion from foreign oil sales due to soaring global petroleum prices. Of total exports, 87.2% went to the US, 10.3% to Europe, and the remainder to Asia.

The median price for Mexico's blend of crudes in 2008 was $84.35/bbl, about 37% higher than in 2007.

However, the country's gasoline imports for 2008 averaged 336,200 b/d, up 9.1% over 2007, a rise that is expected to continue as domestic demand outstrips production from the country's refineries.

Pemex has announced plans to build a new 300,000 b/d refinery, but it has delayed the onset of construction until yearend, and the facility is unlikely to be online before 2015 (OGJ Online, Jan. 20, 2009).

[31R1O]

If you think that the situation in Mexico is volatile now, wait until the oil money runs out.

[Redbob]

Once they found an oilfield, they banned all outside investment.

Now they find they have neither oil nor the expertise to find more.

Oh well.