Mexico - A Failed Oil State

Petróleos Mexicanos (PEMEX),
by Nicholas Newman

There is an awful lot of oil in Mexico to be discovered, but the difficulty is Mexico’s state oil monopoly Petróleos Mexicanos (PEMEX), has trouble finding it! In 2004, Mexican oil production had peaked at 3,383,000 barrels per day (bpd), reports PEMEX. Since then Mexican oil production has shown a steady decline, so by April 2009 output had fallen to 2,642,000 bpd. Unfortunately, for PEMEX it has failed to find new significant replacement oil reserves to compensate.

This is causing concern to not only Mexico, but also to the United States. For the US, Mexico is the third largest supplier of oil, after Canada and Saudi Arabia. In 2004, Mexican oil exports peaked at 1.6 million bpd, and by 2008 had declined to 1.2 million bpd. If current trends in Mexican oil production continue it will make it much more difficult for the US to achieve its ambition of oil independence from OPEC countries. The problem is that, at present, there are very few oil states around the world that have the spare capacity to increase production to take up the slack.