Running just to stand still (Mexico's Pemex)

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Oil producers - Dec 28

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The Oil and the Glory: a slick account of the world of geopolitics

Elizabeth Souder, Dallas Morning News via SJ Mercury-News
... [Oil trader John] Deuss is one of many colorful characters that populate Steve LeVine's The Oil and the Glory. Soon after the Soviet Union collapsed, the oil trader made it his business to negotiate deals in the resulting political chaos, sometimes on board his yacht with an entourage of women. And he saved a slice of each deal for himself.

LeVine describes dozens of characters: oil executives scouting for new fields, leaders of former states eager to pull their countries out of poverty -- or at least line their own pockets -- and the middlemen who brought them together. The KGB constantly buzz around negotiations.

Al Gore, Alfred Nobel, the Taliban and even Jay Leno's wife make appearances.

The central character is the oil beneath the Caspian Sea. LeVine, who lives in Dallas, uses oil to tell the story of how some former Soviet states gained their financial independence from Russia. The book is a fascinating back-door history of the

U.S. officials are drawn to the region out of fears that Chevron's pipeline through Russia will create an "iron umbilical cord" between Russia and its former states. Russia might not produce the Caspian oil, but the country would have its hand on the faucet. A rival pipeline would carry oil west through Georgia and Turkey to the Mediterranean.

... As the world faces $100-a-barrel oil, the media often use the word "geopolitics" to explain the high price. LeVine unravels this mysterious term, in all its juicy, deadly, even absurd detail.
(23 December 2007)
Another recent review from the San Francisco Chronicle.

Chavez oil diplomacy gains ground in Caribbean

Anthony Boadle, Reuters
Venezuelan President Hugo Chavez will assert his regional leadership at a summit in Cuba on Friday for Petrocaribe, his initiative to sell oil to Caribbean nations with soft financing.

With oil prices above $90 a barrel, Petrocaribe is offering terms that few can refuse, even the best allies of the United States: deferred payment of 40 percent of their oil bill for up to 25 years, at 1 percent interest.

"Hugo Chavez wants to use Petrocaribe to establish Venezuela as a regional power," said Dan Erikson, an expert on the Caribbean at the Inter-American Dialogue think tank.

He said Chavez is trying to win support from Caribbean countries "and show that he is basically a good guy trying to help small, poor countries in the region."
(20 December 2007)

Chavez Announces The Beginning Of "a New Geopolitics Of Oil" At The Petrocaribe Summit

Venezuelan President Hugo Chavez opened the Petrocaribe oil summit in the Cuban city of Cienfuegos Friday, announcing, "We have begun to create a new geopolitics of oil that is not at the service of big money interest."

Top officials including heads of states from the Latin American and Caribbean regions have gathered in the coastal city to discuss petroleum deals to benefit smaller countries in the 16 member bloc.

The hawkish Venezuelan leader called on his Caribbean and Latin American counterparts to come together against the "failed dictatorship of world capitalism." He said he wants to use Venezuela's oil reserves to help create a confederation of republics free of U.S. interests.

Chavez also called for creating an international fund to promote alternative energy sources. "Despite the Yankees, our gas is at the service of Venezuela first, and next to our brothers in the Caribbean," he added.
(21 December 2007)

Running just to stand still (Mexico's Pemex)

The Economist
CANTARELL, in the Gulf of Mexico, was once the world's biggest offshore oilfield, holding over 35 billion barrels of the black stuff. Now, after nearly three decades, it is running out. At its peak in 2004 it produced 2.1m barrels of oil per day (b/d), making up 60% of Mexico's total output. That figure has already fallen by more than 500,000 b/d and could fall by another 200,000 b/d by the spring.

This is a worry for both Mexico and the world. Although Mexico contains less than 1% of the world's proven oil reserves, it is the sixth-largest producer. Its output of 3.1m b/d is well above that of Venezuela or Kuwait. And although oil no longer dominates the Mexican economy-even at recent high prices it provided 16% of exports in 2006, down from 68% in 1982-it lubricates the public finances, contributing nearly 40% of federal revenues.

Since its nationalisation in 1938, Mexican oil has been the preserve of Petróleos Mexicanos, a state monopoly. Pemex resembles a poorly run government ministry. Its past three chief executives have all been accused of corruption (though some of these allegations may stem from bureaucratic infighting). It must comply with onerous procurement rules meant to prevent graft, which in practice are merely a drag on getting things done.

This flawed behemoth is now in “a race against time” to compensate for Cantarell, says Fabio Barbosa, an energy specialist at Mexico's National Autonomous University. It is a race that Pemex seems likely to lose.
(19 December 2007)
Comments by Jeffrey Brown (westexas) and others at The Oil Drum. Jeffrey writes:

In a document released in December setting out its strategy for the next five years, the energy ministry forecast that total oil production would decline to 2.5m b/d unless policies were reformed, and would remain roughly constant even if the industry were liberalised.
(from the story)

I am assuming that they are taling about total liquids. The 2006 EIA numbers are as follows:

Production: 3.7 mbpd
Consumption: 2.0
Net Exports: 1.7

So, they are suggesting net exports of 0.5 mbpd in five years, 2012, assuming flat consumption, which would be a net export decline rate of -20%/year. Note that Mexico is in the "red zone," i.e., consuming around 50% of production at peak. This resulted in the net exports from the UK and Indonesia crashing in seven and eight years respectively.

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