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Oil & Mexico: Severe Withdrawal Symptoms Ahead
Diego Cevallos, IPS
MEXICO CITY – Mexico is as addicted to oil as heroin addicts are to their next fix: the country depends on oil for a large proportion of its energy needs, consumes it at an unsustainable rate and goes into debt to obtain it. Unless it changes its behaviour or finds a therapy that works, the prognosis is that it will experience a serious crisis.
The problem is enormous, analysts told IPS. Mexico produces 3.3 million barrels per day (bpd) of crude, making it the sixth world producer; it exports 1.8 million bpd, and owns one of the 10 largest oil companies, the state monopoly Petróleos Mexicanos (PEMEX) — but it is teetering on the edge of an abyss, they said.
Local oil reserves are expected to last only nine years and eight months at current rates of production, according to precise calculations by experts, whereas in 2000 they were forecast to last 20 years and seven months. Besides, PEMEX is bankrupt.
PEMEX has debts greater than its total assets, is undertaking very little exploration, its extraction costs are rising steadily, and most of its revenues go straight into the state coffers to finance 36.1 percent of the national budget, twice the proportion that it contributed 20 years ago.
(25 Jan 2007)
Pemex predicts production drop
El Universal
The progressive decline in Mexico´s capacity to produce oil is rapidly becoming more worrisome than the slump in global crude prices
According to estimates by the state oil company, Pemex, petroleum exports will decline dramatically during the Calderón administration.
Pemex is anticipating a 13 percent drop in its crude exports over the next six years as Mexico´s proven reserves continue shrinking.
Analysts contacted by EL UNIVERSAL agree that Pemex´s inability to increase production is due to waning reserves – particularly the Cantarell field in Campeche Bay which is the source of roughly 60 percent of the nation´s proven reserves – and incapacity to access potential deep-water wells.
The first symptoms of a genuine oil crisis are becoming more and more evident.
Documents acquired by EL UNIVERSAL indicate Pemex will be forced to cut back on exports to the United States. The reduction could reach 150,000 barrels per day in the next four years. In the final two years of the Calderón administration, the reduction could reach 500,000 barrels per day.
(19 Jan 2007)
Curse of the Black Gold: Hope and Betrayal in the Niger Delta
Tom O’Neill, National Geographic
The Niger Delta holds some of the world’s richest oil deposits, yet Nigerians living there are poorer than ever, violence is rampant, and the land and water are fouled. What went wrong?
Oil fouls everything in southern Nigeria. It spills from the pipelines, poisoning soil and water. It stains the hands of politicians and generals, who siphon off its profits. It taints the ambitions of the young, who will try anything to scoop up a share of the liquid riches-fire a gun, sabotage a pipeline, kidnap a foreigner.
Nigeria had all the makings of an uplifting tale: poor African nation blessed with enormous sudden wealth. Visions of prosperity rose with the same force as the oil that first gushed from the Niger Delta’s marshy ground in 1956. The world market craved delta crude, a “sweet,” low-sulfur liquid called Bonny Light, easily refined into gasoline and diesel. By the mid-1970s, Nigeria had joined OPEC (Organization of Petroleum Exporting Countries), and the government’s budget bulged with petrodollars.
Everything looked possible-but everything went wrong.
Dense, garbage-heaped slums stretch for miles. Choking black smoke from an open-air slaughterhouse rolls over housetops. Streets are cratered with potholes and ruts. Vicious gangs roam school grounds. Peddlers and beggars rush up to vehicles stalled in gas lines. This is Port Harcourt, Nigeria’s oil hub, capital of Rivers state, smack-dab in the middle of oil reserves bigger than the United States’ and Mexico’s combined. Port Harcourt should gleam; instead, it rots.
(Feb 2007 issue)
Is the sun setting on oil sector’s heyday?
Global pledges to slash use may put long-term pressure on prices
Shawn McCarthy, Globe & Mail
OTTAWA — U.S. President George W. Bush is not alone in promising policies that would slash oil demand — the European Union and China have also set ambitious efficiency targets.
And that concerted action by the world’s three leading energy consumers could put a damper on demand for crude oil and downward pressure on prices over the long term.
While Mr. Bush talks about ending dependency on imported oil from the Middle East, Canada is the largest single supplier to the United States — exporting as much crude to the U.S. as the Persian Gulf countries combined. And it is the high-cost producers, such as Alberta’s oil sands companies, that would be hit hardest by weak demand and soft prices.
“If I was a producer, I would be really, really concerned,” said Paul Ting, a long-time Wall Street energy analyst who now runs his own consultancy. “There’s not going to be demand destruction, but there will be erosion, and that is going to be a big problem for them.”
(25 Jan 2007)
