Crystal Ball
Financial Times today...
FT REPORT - ENERGY IN THE AMERICAS: 'Delicious dream' in decline
In 1976, the future of Pemex, Mexico's state-owned oil monopoly, looked as bright as it ever had.
The discovery of Cantarell, a huge oil complex located in the Gulf of Mexico, assured abundant supplies of crude for the foreseeable future and cemented the country's place as one of the world's most formidable oil exporters.
For the best part of three decades oil from Cantarell flowed fast and furious - so furious, in fact, that by 2004 its average daily volume of just over 2.1m barrels ranked it the world's second-fastest-producing oil complex after the Ghawar field in Saudi Arabia.
Not only did that make Cantarell by far the most important source of Mexican oil - today it accounts for about 60 per cent of total production - but it also helped turn Mexico into the world's third-biggest oil exporter.
Today, that "delicious dream", as one Pemex official once described Cantarell, is in danger of becoming a nightmare. Production at Cantarell is falling rapidly - according to Pemex, it declined 12 per cent last year and will fall a further 15 per cent this year.
Marisol Rueda in Latin Trade, July 2005...
Slippery Slope
Despite high oil prices, lack of investment at state-run Pemex means Mexico could soon become a crude importer.
After being a virtual gusher of cash for Mexico for many decades, state-run oil company Petróleos Mexicanos (Pemex) seems to be on the verge of drilling a dry hole. The company faces serious challenges in terms of infrastructure and a critical financial situation that, among other things, keeps it from making the exploration investments it needs to counteract a gradual production decline at its existing deposits. If the situation remains unchecked, in a decade Mexico could become an importer of crude oil, warns Pemex General Director Luis RamÃrez Corzo.
For now, the two main problems at Pemex are high levels of debt and the decline of its known oil reserves, according to oil analysts. More money is needed, clearly, but it's less clear from where that cash will come - outside or inside Pemex. New private financing, although not voting shares, is one route, although allowing Pemex to keep more of the cash it generates is another, less politically painful choice, and the more likely path, according to Pemex observers.
FT REPORT - ENERGY IN THE AMERICAS: 'Delicious dream' in decline
In 1976, the future of Pemex, Mexico's state-owned oil monopoly, looked as bright as it ever had.
The discovery of Cantarell, a huge oil complex located in the Gulf of Mexico, assured abundant supplies of crude for the foreseeable future and cemented the country's place as one of the world's most formidable oil exporters.
For the best part of three decades oil from Cantarell flowed fast and furious - so furious, in fact, that by 2004 its average daily volume of just over 2.1m barrels ranked it the world's second-fastest-producing oil complex after the Ghawar field in Saudi Arabia.
Not only did that make Cantarell by far the most important source of Mexican oil - today it accounts for about 60 per cent of total production - but it also helped turn Mexico into the world's third-biggest oil exporter.
Today, that "delicious dream", as one Pemex official once described Cantarell, is in danger of becoming a nightmare. Production at Cantarell is falling rapidly - according to Pemex, it declined 12 per cent last year and will fall a further 15 per cent this year.
Marisol Rueda in Latin Trade, July 2005...
Slippery Slope
Despite high oil prices, lack of investment at state-run Pemex means Mexico could soon become a crude importer.
After being a virtual gusher of cash for Mexico for many decades, state-run oil company Petróleos Mexicanos (Pemex) seems to be on the verge of drilling a dry hole. The company faces serious challenges in terms of infrastructure and a critical financial situation that, among other things, keeps it from making the exploration investments it needs to counteract a gradual production decline at its existing deposits. If the situation remains unchecked, in a decade Mexico could become an importer of crude oil, warns Pemex General Director Luis RamÃrez Corzo.
For now, the two main problems at Pemex are high levels of debt and the decline of its known oil reserves, according to oil analysts. More money is needed, clearly, but it's less clear from where that cash will come - outside or inside Pemex. New private financing, although not voting shares, is one route, although allowing Pemex to keep more of the cash it generates is another, less politically painful choice, and the more likely path, according to Pemex observers.
posted by Greg Brown at 8:38 AM
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