Pemex and Greenspan and Cantarell

Greenspan continues to rattle the markets, now directing his rhetoric at Pemex. His declarations are not without fundaments however. Type your summary here




The text is via Baja Energy Blog
Declining oil output in Mexico could spark a major fiscal crisis there, former Federal Reserve Chairman Alan Greenspan said Wednesday while also railing against U.S. immigration policy.

"There is no doubt that Mexican overall [oil] production is down and if it continues down, and prices don't continue up to offset that, then there is a huge fiscal crisis pending," the former U.S. central banker said via a video link to a business conference in Mexico City.

Mexico, the world's No. 9 exporter of crude oil and a key supplier to the United States, has seen its oil output taper off from historic peaks in 2004 due to declining yields at its huge but aging Cantarell offshore field.
Former Fed chief says lower production could spark a major fiscal crisis there, points out risks of increased immigration to United States.

State oil monopoly Pemex, which provides more than a third of the country's fiscal revenues, is now aiming to keep oil production at 3.1 million barrels per day for the next few years, down 8 percent from a 2004 peak of 3.38 million bpd.

Faced too with a slide in global oil prices from recent record highs, President Felipe Calderón is working on fiscal reform aimed at boosting Mexico's low tax take and easing its economic reliance on oil exports.

On immigration - another top issue on Calderón's agenda - Greenspan said that, while trade was very open between Mexico and the United States, U.S. policies on the movement of labor were protectionist.

"There is no evidence on protectionism with respect to goods. There is protectionism with respect to people. And from an economist's point of view that is indistinguishable." He said Mexico would suffer from a brain drain as many of its best workers crossed the U.S. border, legally or illegally, and incomes would have to rise in Mexico before the flow of migrants slows.

"There is no way I know of that you are essentially going to prevent people who want to go across a very long border," he said.
"The only real solution to the immigration problem is for capital incomes in Mexico to be brought up."

Here is some info in spanish via CNN:

"..
CIUDAD DE MÉXICO (CNNExpansión.com) — El ex presidente de la Reserva Federal, Alan Greenspan, afirmó que México se verá obligado a hacer los cambios constitucionales necesarios que permitan la entrada de inversión extranjera al sector energético.

“México no puede incorporar inversionistas extranjeros (al sector energético) en ninguna proporción porque la constitución, hasta donde recuerdo, lo prohíbe”, aseguró en una videoconferencia transmitida en la Ciudad de México.
“Es un tema político en México y de alguna manera habrá que modificar la constitución, y la razón por la cual es indispensable y muy importante es porque los recursos de Petróleos Mexicanos proveen del 30 al 35% el presupuesto del país”, agregó Greenspan desde Washington, a través de un traductor.

Al dictar su conferencia en el marco de la ExpoManagement, Greenspan dijo que las modificaciones al marco legal se vuelven urgentes ante la decreciente producción de Cantarell, uno los principales pozos petroleros que explota la paraestatal Pemex. ..."


And then info from USA's EIA

"...
Mexico is one of the top three sources of U.S. oil imports. According to the Oil and Gas Journal ( OGJ ), Mexico had 12.9 billion barrels of proven oi l reserves as of January 1, 2006 , the third-largest amount of conventional crude oil reserves in the Western Hemisphere . Most reserves consist of heavy crude oil varieties, with a specific gravity of less than 25° API. The largest concentration of remaining reserves occurs offshore in the southern part of the country , especially in the Campeche Basin .

Mexico is t he fifth-largest producer of oil in the world. The country produced an average of 3.7 4 million barrels pe r day (bbl/d) of total oil liquids during 2006, a 1.2 percent decline from 2005 and a 2.5 percent decline from 2004. Of Mexico ’s oil production, about 88 percent was crude oil and condensate, the rest consisting of natural gas liquids (NGL) and refinery gain. Many analysts believe that Mexican oil production has peaked, and that the country’s production will continue to decline in the coming years. EIA forecasts that Mexico will produce 3. 6 million bbl/d of oil in 2007, down from 3.8 million bbl/d in 2005 and 3.7 million bbl/d in 2006, mainly driven by declining production at its super-giant Cantarell field (please see below for a more detailed discussion of Cantarell ).

Mexico ’s proven reserves have declined in recent years. According to state-owned Pemex , Mexico ’s reserves/production ratio (based on previous-year production levels) fell from 20 y ears in 2002 to 10 years in 2006 . Analysts believe that Pemex does not have sufficient funds available for exploration and investment to reverse the decline , owing to high financial burdens placed upon the com pany by the Mexican government. ..."