Less Oil From Mexico

by BWK ~ March 31, 2008

Less oil from Mexico. No relief in sight. Lots more bodies in the northern export pipeline, however.

And the Mexican government is assessing additional charges on PEMEX for funding, to cover administrative overhead of the Mexican government. That is, the government is “raising taxes” (after a fashion) on the oil monopoly PEMEX. So now PEMEX has less money with which to invest in new wells and upgrades.

Actually, PEMEX is so far behind in new drilling and field upgrades that it will take a decade to catch up, if they start tomorrow. Wich they won’t. And if they had the money to do it. Which they don’t. And if the cost of oilfield equipment and services was not skyrocketing. Which it is.

Really…… Mexico has the worst of all possible worlds. State-owned oil company. But it has to fund E&P with internal cash. And the govt taxes away all the cash. And PEMEX has to offer large-scale employment to the masses, so is rife with featherbedding.

And PEMEX cannot make partnerships with foreign oil companies or most service providers because that would “give away the national patrimony.” This seems crazy.

For the Oil and Gas journal article read here.

Or read here for a Bloomberg article that describes the ongoing situation of lowered PEMEX output.

Until we meet again,

Byron King

Note: Byron King is a frequent contributor to the free e-letter Whiskey & Gunpowder. To receive daily insights into energy, oil, commodities and other natural resources sign up here!

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