Mexico's Ability to Export Oil

NOTE: Images in this archived article have been removed.

[ Mexico’s Cantarell field, the second highest oil-producing field in the world, has begun a premature decline, signaling an imminent peak of overall Mexican oil production. Khebab of GraphOilogy here demonstrates, with a quite technical analysis, what this will likely mean for oil exports from a country with a growing population and appetite for oil. -AF ]

Note: This post is the third in the same topic, previous posts were the following:

Saudi Arabia
Iran

Mexico is the second largest source of crude imports for the US with 1.55 mbpd in 2005 [5]. I tried to compile different URR (Ultimate Recoverable Ressource) estimates from various sources:

Source	Reserves	Year	Cumulative	YTF	Ultimate
BP Statistical Review	14.803	Year-End 2004	33.9	5.975	54.67
Oil & Gas Journal	12.882	January 1, 2006	35.8	5.975	54.67
World Oil	14.803	Year-End 2004	33.9	5.975	54.67
IHS	30	Year-End 2002	27	14	71-99
USGS	25.1	Year-End 1996	23.6	18.603	54.7-88.9
ASPO	28.6	2002	23	4.2	50

volumes are in Giga-barrels (Gb)

The production profile is taken from BP Statistical Review of World Energy (june 2005) and completed for years prior to 1965 by using the ASPO graph shown on Figure 1. (Note: I’m not sure that this production profile includes all liquids).

Fig 1. Oil production of Mexico (src: ASPO)

From the table above, we can design a simple triangular probability density function for the URR where the maximum of probability corresponds to the median value.

Fig 2. URR probability distribution function derived from the table above.

In order to model future production, I applied the SBM-PF method and the Hubbert Linearization technique. The results are shown on Figure 3 and 4. Both methods give similar result for the future production profile which is predicted to decline from 2006 with a decline rate between 7% and 8%.

Fig 3. Future production based on the SBM-PF method and the Hubbert Linearization technique (see Figure 4). Both methods give an URR around 72 Gb. Production is peaking in 2005-2006.

Fig 4. Same as Figure 3 but using a P/Q versus Q representation.

The domestic oil consumption has grown rapidly but is showing signs of a slow down since 2000 (see Figure 5). Note also that retail prices for Diesel and super-gasoline have increased since 2000 (see Figure 6).

Fig 5. Mexico’s oil consumption (millions of barrels per day, src: BP)

Fig 6. Green Benchmark Line = Retail Fuel Prices in the UNITED STATES. Red Benchmark Line = CRUDE OIL Prices on World Market (“Brent” at Rotterdam)[3]

The annual population growth rate is about 1.9% [1]. The population was 107.0 million in mid-2005 and is expected to reach 129.4 million in 2025 (Population Reference Bureau). If we divide the oil consumption by the population numbers, we can see that the oil consumption seems to have reach a ceiling since the 90s at about 6.5 barrel/capita/year (Figure 8).

Fig 7. Mexico population trend (src: UN)

Fig 8. Number of barrels consumed per capita per year.

Based on a constant consumption per capita (blue dotted line on Figure 8) we predict Mexico’s future oil consumption based on the UN population forecast shown on Figure 7. The result is shown on Figure 9 for the three population model variants. The oil production forecast for Mexico was derived from the SBM-PF model. We can observe that the oil exports are expected to go down by 2006-2007. The fraction of oil exports may fall below 40% after 2015 (Figure 10) and the US could lose an important and reliable source of oil imports (92% of Mexico’s exports are for the US).

Fig 9. Projected oil consumption based on the population growth and a constant consumption per capita per year (6.5 barrels/capita/year).

Fig 10. Projected share of the oil exports for the different population scenario. The export share will reach a maximum between 2006 and 2007.

References:

[1] PRB Country Profiles: Mexico
[2] Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects: The 2004 Revision and World Urbanization Prospects: The 2003 Revision
[3] www.internationalfuelprices.com
[4] NIGC – Country Analysis Briefs: North America: Mexico [eia.doe.org]
[5] Crude Oil and Total Petroleum Imports Top 15 Countries

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Mexico’s Ability to Export Oil

Khebab

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