PEMEX Reports Increase in Oil Production, Exports
Mexico's state-owned energy company Petroleos Mexicanos (PEMEX) in December 2010 reached its highest crude oil production in the prior seven months with an average 2,574,000 b/d. PEMEX, which holds a monopoly on the nation's oil and gas production, reported that its crude oil production stabilized in 2010, with an average of 2,576,000 b/d.
The increase in oil production is good news, as the country's oil production has fallen in recent years as production has declined from Cantarell, once one of the world's largest oil fields. In 2009, Cantarell produced 630,000 b/d, down 38 percent from the 2008 level and down 70 percent from the peak production level of 2.12 million b/d in 2004. The production decline has only been partially offset by higher production from other areas, the U.S. Energy Information Administration reported in a June 2010 report.
The oil sector is a crucial component of Mexico's economy. While the oil industry's relative importance to the general Mexican economy has declined in the long -term outlook, the oil sector still generates over 15 percent of the country's export earnings. The government relies on earnings from the oil industry, including taxes and direct payments from PEMEX, for about 40 percent of total government revenues. "Therefore, any decline in production at Pemex has a direct effect upon the country's overall fiscal balance," EIA said.
EIA forecasted in its International Energy Outlook 2010 that Mexico could become a net importer by 2015, with net imports reaching 1.3 million b/d by 2035. "As one of the largest oil exporters to the United States, this has important implications for future U.S. energy supplies," EIA said.
In 2008, Mexico enacted new legislation to reform the country's oil sector to enable PEMEX to curb the oil production slide, including greater autonomy to establish more flexible mechanisms for procurement and investment and ability to create incentive-based service contracts with private companies.
PEMEX's crude oil exports in 2010 totaled 1.36 million b/d, representing an increase of 11 percent as compared to the previous year. The total value of these exports, in cash flow, stood at approximately US $35.9 billion, up more than US $10 billion or 40 percent from 2009. The weighted average export price of the Mexican crude oil basket for the year was of US $72.33 per barrel.
PEMEX's natural gas production for 2010 totaled 7,020 MMcf/d, down 0.2 percent from the previous year. Nearly 40 percent was produced offshore, with 65 percent corresponded to associated gas and the rest to non-associated gas.
Mexico's gas production has grown in recent years following steady declines during the late 1990s. During that time, gas consumption has grown steadily, driven mostly by the electricity sector, whose share of total gas consumption grew from 18 percent in 1997 to 31 percent in 2008. PEMEX itself is the largest single consumer of gas, representing around 40 percent of domestic consumption, EIA said.
While natural gas is replacing oil more frequently as a feedstock for power generation in Mexico, the nation is a net importer of natural gas, so higher levels of gas consumption will likely depend upon higher imports from either the U.S. or liquefied natural gas imports, EIA noted.
Southern Mexico contains the largest share of proven gas reserves, but northern Mexico will likely become the center for future reserves growth, as it contains nearly 10 times as much probable and possible gas reserves as the southern region.
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