Mexican national oil monopoly in crisis on 69th anniversary of expropriation

Depleted reserves, crumbling pipelines, outdated technology and billions of dollars (euros) in debt.

It doesn’t seem much to celebrate. While Petroleos Mexicanos executives and union leaders prepare to deliver patriotic speeches and sing the national anthem at Sunday’s 69th anniversary of the nationalization of Mexico’s oil sector, energy experts say Pemex needs to stop looking backward, and invest much more in new development to ensure future reveneues.
“My feeling is that they’re going to keep their heads down on oil policy for 12 months or so,” said George Baker, a Houston, Texas-based energy analyst who publishes a newsletter called “Mexico Energy Intelligence.”

Another reason Mexico is unlikely to see high-impact proposals for change is Pemex’s own confidence that it can resolve its most-pressing problem: declining production at the shallow-water Cantarell oil field off the Gulf coast.

The problem is crucial: The field is Mexico’s largest single source of crude oil, oil provides nearly 40 percent of the government’s revenues and Mexico is one of the largest exporters of oil to the United States.

“Whatever happens in Cantarell affects public finances and the credit rating not only of Pemex but of the country as well,” Baker wrote in a policy paper last month.

Pemex CEO Jesus Reyes Heroles said last month that the company can make up for a good part of that lost production with expanded output at the offshore Ku-Maloob-Zaap oil field in the Gulf’s Campeche Sound, and other projects.

But David Shields, an independent energy expert in Mexico City who has written books on Pemex, has his doubts.

Shields, citing Pemex’s own internal projections, says while the government estimates a production drop of about 200,000 barrels a day this year, “it’s probably going to be much more than that, around 600,000.”

International Herald Tribune