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.

You can read the article here.

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