Mexican Oil Company Reports 5.9 Per Cent Drop in Production in January

Excerpt from report by respected Mexican business newspaper El Financiero website on 22 February

[Report by Esther Arzate: Crude Oil Exports at Lowest Level in Last 12 Years]

Mexican Petroleum [Pemex] began the year badly. Its oil production decreased 5.9 per cent and exports fell 9.4 per cent in January compared to the same month of 2007.

The volume of exports in January reached their lowest level in the last 12 years.

Nevertheless, the income that the parastate company obtained from exports of the hydrocarbon increased 62.5 per cent, due to the high prices recorded by the product in the international market.

And the fact is that in January of last year the price of the Mexican oil blend was at 44.90 dollars per barrel, and in the same period of this year it recorded an average price of 79.60 dollars per barrel, which generated currency income totalling 3.539bn dollars, compared to the 2.178bn dollars obtained in January of the previous year.

The oil company reported income totalling 4.036bn dollars from sales abroad of crude oil, petroleum products, petrochemicals, and natural gas, but it also spent 1.701bn dollars.

In addition, it imported 301,000 barrels of gasoline per day, a volume that is 28.8 per cent greater than that recorded in the same month of the previous year, but 14 per cent less than the purchases made abroad in December 2007.

Automobile gasoline sales in the first month of the year totalled 764,600 barrels per day, a volume that represented a 5.5 per cent increase over January of last year. Gasoline demand has grown 20.2 per cent since 2004.

[passage omitted on energy consultant George Baker's explanation of decline in oil production]

Weather Factors

Pemex indicated that oil production in January was 2.957m barrels per day, compared to the 3.143m barrels that it produced in the same month of the previous year.

Besides the decline of Cantarell, the drop in production was due to the fact that operations were suspended in January at different export points in the country because of adverse weather conditions.

That is why exports of the hydrocarbon went from 1.582m barrels per day in the first month of 2007 to 1.434m barrels in the same month of this year. Unlike the downward trend in crude oil production, gas extraction reached the historic figure of 6.534bn cubic feet per day. That volume is 13.9 per cent greater than that recorded in the same period of 2007.

The increase in gas production was mainly due to greater production at the wells in the marine regions; increasing activity at the Lankahuasa, Burgos, and Veracruz projects; and gas extraction related to the Marine Light Crude project and the Ixtal-Manik project.

Meanwhile, the company indicated that in January the Pemex Petrochemical subsidiary produced 1.008m tons of petrochemical products, 370,900 of which were sold in the national market, with a value of 2,725,300,000 pesos [252.8m dollars].

Pemex reported positive figures in that sector: imports decreased, going from 33.9m tons per day to 6.3m tons, which also meant a drop in value from 16.7m dollars to only 6.9m dollars in the reference period.

Originally published by El Financiero website, Mexico City, in Spanish 22 Feb 08.

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