Mexican Production Disappoints Again In July - Big Time

The game plan for Mexican oil production was that declines of 15% or so in the giant Cantarell field would be offset in 2008 and 2009 by increases in a couple of smaller and newer fields, keeping production about level until 2010, when total Mexican production would decline.  That does not seem to be happening.  In actual fact, Cantarell production seems to be starting to decline much faster.

The decline rate was running nearly 20% in May and June and now July production at Cantarell is reported to be down by 36%.  That meant that total Mexican oil production was actually down an astounding 12% resulting in a 22% drop in Mexican exports in July (presumably due to increasing domestic oil consumption in Mexico - the Export Land Model at work again.)  Below are posted a couple of reports - one from The Oil Drum with well deserved exclamation points and another more terse one from Reuters.

Free Fall in Mexico!

Canatrell production is down 36%!! and exports are down by 22%!!, this is much sharper then expected:

Pemex July Oil Output Falls 12% as Cantarell Declines (Update2)

By Thomas Black

Aug. 21 (Bloomberg) — Petroleos Mexicanos, the third- largest supplier of oil to the U.S., said production fell 12 percent in July from a year earlier as output declined at Cantarell, the world’s largest third-largest offshore oil field.

July’s daily output dropped to 2.782 million barrels from 3.166 million barrels in the same month last year, the state- owned oil company, known as Pemex, said today on its Web site. In June, Pemex produced 2.839 million barrels.

Daily production at Cantarell, which first began pumping oil in 1979, plummeted 36 percent in July to 973,668 barrels from 1.526 million, according to an Energy Ministry Web site.

Faster-than-expected declines at Cantarell prompted Pemex to lower its oil production target in July for the second time in as many months. The Mexico City-based company reduced its 2008 daily production target to 2.8 million barrels from 2.9 million.

For the first seven months of the year, Pemex produced 2.845 million barrels a day, 10 percent less than a year earlier. Cantarell’s daily production was 1.127 million barrels, 472,000 barrels lower than the same period last year, Pemex said.

Crude exports in July fell 22 percent to 1.377 million barrels a day from a year earlier. Daily exports were 1.415 million barrels in June.

Posted in Categories: Commodities, Contributor, External Research.

Subscribe by RSS Subscribe by Email