We've written a great deal here at The Barrel about the woeful performance of Mexico's oil industry.
A milestone was reached last month, and it's nothing to celebrate for anybody: Production of the Cantarell oil complex in Mexico's Sound of Campeche dropped below 1 million b/d in August for the first time in 13 years.
As Platts' Mexico city correspondent Ron Buchanan reported today, Canatarell produced more than 2.2 million b/d as recently as 2004. The year-on-year decline for August is 26.7%, more than 350,000 b/d.
Total Mexican output in August was down about 9.2% from the previous year, and there was some good news in the report. As Ron noted, the Ku-Maloob-Zaap (KMZ) complex further out in the Sound of Campeche, produced 716,979 b/d in August, up from 504,229 b/d a year earlier. The August figure is a record output.
But as Ron also wrote, "Many other fields are declining and others that were touted as partial replacements for the lost Cantarell production have turned in meager results."
High oil prices have masked the decline to a degree, because total revenue continues to rise. But if world prices resume their downward trend after shaking off the increases of the past days, it seems likely that year-on-year, revenue will be lower, along with the total amount of crude being produced. If these output numbers aren't a wake-up call for a country that is wedded to an outdated model of state oil company management, it's hard to know what will be.
There's nobody who thinks the Mexican problem is a weak reserve base. It's simply a mismanaged approach toward developing those reserves.
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