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Latin America: Beating The Oil Curse
Mexico’s troubled national oil company could siphon some good ideas from Brazil’s petroleum success story
With oil prices as high as they are, you’d think Mexico’s state-run oil company, PetrÃ³leos Mexicanos (Pemex), would be awash in cash. But it lost money five out of the past six years and racked up just $3.9 billion in profits in 2006 on a record $97 billion in sales. Why? Because it had to hand almost $54 billion in taxes and royalties to the national treasury last year, accounting for nearly 40% of the government’s revenues.
Pemex is Mexico’s piÃ±ata. Politicians are so accustomed to the steady flow of cash from the company that they’ve never mustered the discipline to cut government spending or carry out major tax reform. Now, after years of underinvesting in exploration, Pemex is watching helplessly as output from its biggest oil field, Cantarell, declines by 20% a year. At current production rates, Mexico’s oil reserves will last less than 10 years, meaning the world’s sixth-largest oil-producing country runs the risk of becoming an oil importer.
Contrast Pemex’s woes with the situation in Brazil.
(4 June 2007 issue)
U.S. slashes forecast for Mexican oil output
Robert Campbell, Reuters via PetroleumWorld
U.S. government forecasters sharply reduced their projection for Mexican oil output in a report released on Monday after reassessing the willingness of the Mexican government to open up the country’s oil sector to foreign investment.
The Energy Information Administration said in its 2007 International Energy Outlook that Mexican oil production will decline to 3 million barrels per day by 2012 before gradually rebounding to reach 3.5 million bpd by 2030.
Mexico pumped 3.185 million bpd in April, down from the average 3.256 million bpd produced in 2006, state oil company Pemex said on Monday.
The EIA had projected in its 2006 Outlook that Mexican oil production would hit 4 million bpd by 2010 and 5.1 million bpd by 2030 as resources in the deeper waters of the Gulf of Mexico were brought into production.
Falling production at Mexico’s giant Cantarell oil field, one of the largest in the world, is being only partially replaced by new developments in shallow waters while deepwater exploration efforts remain in their infancy, the EIA said.
(25 May 2007)
Analysis: Iraq oil law in limbo
Ben Lando, UPI
Iraq’s oil unions aren’t shutting off the crude taps yet, awaiting a response from the prime minister on demands, which include opposition to the draft oil law, before striking.
A strike would signal the unions’ power among Iraq’s political leadership in Baghdad, whose coffers are filled nearly completely by oil sales, and add another voice to the disgruntled reaction to the law. And it would take 1.6 million barrels per day from the global market, tightening a supply that has already pushed the price to around $71 per barrel.
The law would govern Iraq’s 115 billion barrels of proven reserves, more than every country but Saudi Arabia and Iran, dictating the rights of foreign companies in what has been a nationalized system for three decades.
Hassan Jumaa Awad, president of the Iraqi Federation of Oil Unions, an umbrella group representing more than 26,000 workers, said their complaints with the law rest primarily on the fear foreign companies will have too much access to — and possibly ownership of — Iraq’s oil.
(24 May 2007)
Iraq oil law: It’s all about oil
Dennis J. Kucinich, AfterDowningStreet
Summary and Notes from Congressman Kucinich’s One Hour Speech Before the United States House of Representatives On Administration’s Efforts to Privatize Iraq Oil
The Iraqi “Hydrocarbon Law” is an issue of critical importance, but has been seriously mischaracterized and I want to provide the House of Representatives the facts and evidence to support the concerns I have expressed.
As you know, the Administration set several benchmarks for the Iraqi government, including passage of the “Hydrocarbon Law” by the Iraqi Parliament. The Administration has emphasized only a small part of this law, the “fair” distribution of oil revenues. Consider the fact that the Iraqi “Hydrocarbon Law” contains a mere three sentences that generally discusses the “fair” distribution of oil.
Except for three scant lines, the entire 33 page “Hydrocarbon Law,” is about creating a complex legal structure to facilitate the privatization of Iraqi oil. As such, it in imperative that all of us carefully read the Iraqi Parliament’s bill because the Congress is on the record in promoting oil privatization.
(23 May 2007)
Also posted at Znet.
China and USA in New Cold War over Africa’s Oil Riches
F. William Engdahl, Global Research
Darfur? It’s the Oil, Stupid…
To paraphrase the famous quip during the 1992 US Presidential debates, when an unknown William Jefferson Clinton told then-President George Herbert Walker Bush, “It’s the economy, stupid,” the present concern of the current Washington Administration over Darfur in southern Sudan is not, if we were to look closely, genuine concern over genocide against the peoples in that poorest of poor part of a forsaken section of Africa.
No. “It’s the oil, stupid.”
Hereby hangs a tale of cynical dimension appropriate to a Washington Administration that has shown no regard for its own genocide in Iraq, when its control over major oil reserves is involved. What’s at stake in the battle for Darfur? Control over oil, lots and lots of oil.
The case of Darfur, a forbidding piece of sun-parched real estate in the southern part of Sudan, illustrates the new Cold War over oil, where the dramatic rise in China’s oil demand to fuel its booming growth has led Beijing to embark on an aggressive policy of-ironically– dollar diplomacy. With its more than $1.3 trillion in mainly US dollar reserves at the Peoples’ National Bank of China, Beijing is engaging in active petroleum geopolitics. Africa is a major focus, and in Africa, the central region between Sudan and Chad is priority. This is defining a major new front in what, since the US invasion of Iraq in 2003, is a new Cold War between Washington and Beijing over control of major oil sources. So far Beijing has played its cards a bit more cleverly than Washington. Darfur is a major battleground in this high-stakes contest for oil control.
(20 May 2007)