Spilling Oil In Mexico

Energy: Mexico swims in oil, but long-standing nationalism inhibits its extraction. Now its oil revenues are running low, while emigrant remittances soar. What’s wrong with this picture?

Mexico’s state oil company, known as Pemex, celebrated a gloomy 69th birthday last Sunday, with CEO Jesus Reyes Heroles announcing that proven reserves in 2006 had slid to 15.5 billion barrels, down 5.8% from the year before.


Without new investment, he said, the oil monopoly has just 9.3 years left before it all runs out, based on its current levels of output. Reyes Heroles estimates Pemex needs $8 billion to $10 billion in investment just to stay even.

Falling production, even in an global oil boom, Heroles added, would cut into earnings and strain the Mexican government’s finances, which take over 90% of Pemex’s profits. Pemex, he said, is ‘in critical condition.’

Investor’s Business Daily