Mexico's Crude Production Continues to Slide in February

MEXICO CITY, March 24, 2008 (Dow Jones Newswires)

Mexican state oil monopoly Petroleos Mexicanos, or Pemex, said Monday that crude oil production and exports continued to fall in February amid a decline in output at Mexico's offshore Cantarell oilfield.

Pemex said it produced an average of 2.94 million barrels a day of crude oil in the first two months of this year, down 6.4% from the same period in 2007.

February crude production was 2.93 million barrels a day, down from 2.96 million barrels a day in January and 3.15 million in February 2007.

Pemex said the main reason for the drop in production is the declining output levels at offshore Cantarell, Mexico's biggest oil field.

Production at Cantarell fell to 1.22 million barrels a day last month from 1.27 million in January and 1.58 million in February 2007. That was only partly compensated for by an increase in production at Ku-Maloob-Zaap, which rose to 676,560 barrels a day in February from 652,569 in January and 478,016 barrels a day in February 2007.

Lower crude production has also affected exports from Mexico, one of the top foreign suppliers of crude oil to the U.S.

Pemex said exports in the first two months of the year averaged 1.43 million barrels a day, a drop of 14.6% from the same period in 2007. February exports were practically unchanged from January at 1.43 million barrels a day, but down sharply from 1.77 million barrels a day in February 2007.

Natural gas production, meanwhile, was a record 6.537 billion cubic feet a day in the two-month period, up 13.2% from the first two months of 2007.

Pemex said it obtained greater gas output from offshore oil fields, and increased production from the Lankahuasa, Burgos and Veracruz gas projects.

The continuing decline in crude production comes amid debate in Mexico on possible changes in energy laws that would allow the state firm to form partnerships with foreign companies to exploit potential reserves in deep water deposits in the Gulf of Mexico. The government has yet to submit a proposal, although left-wing opposition leader Andres Manuel Lopez Obrador has begun a campaign against energy reform.

Pemex has drilled a handful of deep water wells using contractors, but production is seen years away.

Pemex Chief Executive Jesus Reyes Heroles, speaking last week on the 70th anniversary of Mexico's oil industry expropriation, called for rules that allow Pemex to team up with other companies.

"No oil company has such a broad and absolute prohibition as Pemex has to develop projects alongside other companies," he said.

At the same event, Mexican President Felipe Calderon said he ordered Pemex and the Energy Ministry to do studies for building a new refinery in Mexico to reduce the country's dependence on imported petroleum products.

While its crude oil production and exports slipped, Mexico's imports of gasoline have been steadily rising to meet domestic demand.

Pemex said its gasoline imports averaged 338,600 barrels a day in February, up from 304,400 in January and 254,800 in the year-ago month.

MEXICO CITY, March 24, 2008 (Dow Jones Newswires)


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