Down 10%, Mexico Oil Reserves Gone In 9 Years Without New Finds

(By Adam Williams-Bloomberg)

Mexico’s existing oil reserves are dwindling so fast the country could go dry within nine years without new discoveries.

That’s the message from the National Hydrocarbons Commission, which said Friday that the reserves fell 10.6 percent to 9.16 billion barrels in 2016, from 10.24 billion barrels a year earlier. Once the world’s third largest crude producer, Mexico’s proven reserves have declined 34 percent since 2013.

The decline in proven reserves is driven by record-low drilling activity the last three years, according to CNH Commissioner Hector Acosta. State-owned producer Petroleos Mexicanos drilled 21 wells last year, a record low, after averaging 31 per year since 2010.

“If there isn’t drilling, it is going to be difficult to incorporate new finds,” Acosta said. “The production figures and indicators that we are observing, tell us that there are flaws in the drilling activities being carried out by Pemex.”

  • Record-low drilling activity for 3 years seen as the cause
  • Foreign explorers now working offshore offer boost by 2024

The diminished production comes from a combination of reduced investment and the continued maturation of fields, said Cesar Alejandro Mar, Adjunct Director of Reserves. He set 8.9 years as a time frame for the reserves to run out if no new exploration occurs.

Pemex, meanwhile, said in an e-mailed statement that it added 684 million barrels of probable crude to the reserves last year, and “will continue working to increase reserves and restitution rates to higher levels.”

Monopoly End

Mexico ended Pemex’s production monopoly in 2013 to let private operators develop oil in the country for the first time since the 1930s. Production is set to fall below 2 million daily barrels this year, the lowest levels since 1980, Pemex has said. Overall, crude production has declined every year since 2004.

Given increased crude development activity anticipated in the deep waters of the Gulf of Mexico by private producers, the country’s production is forecast to climb to 3.4 million barrels a day by 2040, according to a report by the International Energy Agency.

Italian producer Eni SpA, which won rights to develop a Gulf of Mexico field in 2015, recorded the country’s offshore find by a foreign company in more than seven decades on March 23.

“Mexico isn’t the only country that has seen its reserves diminished during a difficult time for the industry worldwide,” said Juan Carlos Zepeda, a CNH Commissioner, when the numbers were released. “International oil companies are just now starting to return to an improved investment rhythm.”

Original article here: Down 10%, Mexico Oil Reserves Gone In 9 Years Without New Finds.

I wanted to post this Bloomberg article on Mexico’s falling oil reserves because it is a perfect indicator of the continued disintegration of the global oil industry.  While it is true that Mexico is now allowing foreign capital to come in and assist in the exploration and production of future oil projects, it won’t boost production to at least 2024.

However, I have my doubts that Mexico will be able to increase production all that much in the future.

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8 Comments on "Down 10%, Mexico Oil Reserves Gone In 9 Years Without New Finds"

  1. James Papsdorf | April 1, 2017 at 11:27 am |

    Any thoughts on the implications of this situation for the Mexican mining projects

    • James Papsdorf,

      Even though Mexico’s oil production is declining, they can still import oil. That being said, according to the USGS 2017 Silver Summary, Mexico only had 37,000 metric tons (mt) of silver reserves. They mined approximately 5,600 mt last year. Which means, Mexico has about 7 years or less of silver reserves. China has less than 5 years worth of gold reserves.. LOL.

      The situation will become quite interesting going forward.


  2. Northwest Resident | April 1, 2017 at 11:56 am |

    Not much worth drilling for is my guess. And they know it.

  3. That’s why walls are built. Venezuela, Mexico, failed states, failed continents. They are working on Europe too, to prevent influx of millions as soon as things go south. Trump calling for more defense expenses in the EU to “support Nato”? No, its just an argument to have EU defense ready to counter the influx of hordes from mena. An argument to create defense budgets in sleepy, socialist Europe, to avoid having to mention the real deal; mass starvation in certain regions. Can’t have that can we? .gov is in the know, they’re not stupid. Not really.

    First tens of thousands into Europe, terror attacks. The souls are not ripe yet, so watch for more. Much more, and then, closed borders, military and shit. Are we that ignorant assuming we ‘know’ stuff by reading the interwebs while .gov fucks up? Don’t think so. Watch what they do, not what they say. EU has got a lot of gold, the US has a strong military. Now what?

    I’d say; carrier groups and nukes are not the way to go.

    • I’m inclined to agree with HoutSkool. This phenomenon is going to motivate impoverished new-third-world hordes north out of Central America and Mexico, and out of MENA into Europe, around the same time that local politics in the destination countries is going to shift dramatically in favor of radical right-wing / populist / nationalist wall-building and pushback against the first wave of Soros-sponsored migrants. The process will be exacerbated by rising prices for food, the result of reduction in availability and economy of petroleum-based agriculture complicated by unwelcome changes in very-long-term weather cycles — at the same time that we experience a crisis in debt-based banking and peak political corruption. It’s going to be quite a show, likely lasting for many years. Stockpile popcorn!

  4. How things have changed. In the good old days, harvesting timber, coal, iron, fish, diamonds, PMs, or oil was pretty straight forward. You got investors who could make a fairly straight forward decision based on straight forward parameters: That there was a limitless supply, and that the business really boiled down to marketing or other straight forward “soft” strategies that required only a simple business degree to understand.

    Now there are so many undercurrents lurking in the shadows, from unstable debt, or very complex technology whose effectiveness is difficult to determine, or whether competing disruptive technologies will emerge, or most importantly, whether the entire industry will survive based on unknowable depletion rates that the whole thing has been crap shoot. But it is starting to appear, even to the uninitiated, that some sectors, especially the energy sector, may be flat out bad bets.

  5. Bhavesh Modi | April 1, 2017 at 10:11 pm |

    Thanks Steve…Cheers-

  6. “The decline in proven reserves is driven by record-low drilling activity the last three years, ”

    Quelle surprise!

Comments are closed.