MEXICO CITY, Mexico (Reuters):
Mexican state-run oil monopoly Pemex acknowledged yesterday that output from its main oilfield Cantarell is declining faster than previously thought.
Chief Executive Jesus Reyes Heroles said the company's official production estimate for Cantarell was for an average of 1.526 million barrels per day (bpd) during 2007, down 15 per cent from an average 1.788 million bpd last year.
He said Cantarell would probably remain as Mexico's main oil field during new President Felipe Calderon's six years in office, as Pemex gradually lifts output at younger oil fields like Ku Maloob Zaap and Chicontepec.
Reyes Heroles sounded pessimistic that the Mexican Congress would carry out constitutional reforms some say are needed to allow direct private investment in exploration and production, to shore up declining oil reserves and stagnating production.
He said that meant Pemex would only be able to work with private companies as it currently does, using service contracts.
Legal framework
"We are not working under the assumption that there are going to be in the short term, nor in the term of the administration, constitutional reforms that would substantially change Pemex's activities," he said. "Therefore, the participation of private companies ... would have to be subjected to this basic legal framework."
Many analysts say Pemex needs to form strategic partnerships with foreign companies that have the cash and technology to help it explore deepwater oil deposits.
Yet foreign oil majors have little incentive to share their expertise and investment without a share in profit, which would be barred by the Mexican constitution, which says only Pemex can explore for and produce oil and gas.
Pemex needs to invest US$15 billion in exploration and production annually to keep total production between 3.0 million and 3.1 million bpd, Reyes Heroles said.
The exploration and production budget for 2007 is US$14 billion, he added, just short of that target.
A source at Pemex told Reuters last week that output at Cantarell, the world's biggest offshorefield, was set to drop to an average 1.5 million bpd or less in 2007.
Cantarell's ever-faster decline is alarming for Mexico, which depends on oil exports for a third of its fiscal income, and for the United States, which is Pemex's biggest client and keen for politically stable oil producers to keep up shipments to balance supply uncertainty in the Middle East and Africa.
Crude output at offshore oil field Ku Maloob Zaap should reach up to 800,000 bpd by the end of 2008 and onshore field Chicontepec should be producing 660,000 bpd by 2015, Reyes Heroles said.
Pemex plans to drill 1,000 new wells annually in Chicontepec in the coming years, from around 200 wells a year being drilled at the moment, Reyes Heroles said.
