New President in Mexico Could Mean Less Oil Production
by: Andrew Schneider, July 2, 2012 5:07:00 pm
During his campaign, Peña Nieto advocated constitutional reform to make Mexico's oil sector more efficient and to lure more foreign investment. But he said state oil monopoly Pemex must remain in government hands.
Peter Zeihan is vice president of analysis for private intelligence firm Stratfor.
"So long as it is unconstitutional for foreigners to own any piece or claim any reserves anywhere in Mexico, it's going to be next to impossible for the country to engage in the sort of reform, institutional buildup, and financial investment that is going to be required to turn around what is in effect an oil industry in terminal decline."
Zeihan says Pemex lacks the money, the expertise, and the technology to develop new reservoirs to make up for falling production from Mexico's giant offshore Cantarell Field.
Mexico currently produces nearly 2.5 million barrels a day. Only about half of that is exported. Zeihan says that growing domestic demand combined with falling crude production will make Mexico a net oil importer in the not too distant future.
Andrew Schneider. KUHF News.