Petroleos Mexicanos (PEMEX), Mexico’s state oil company, will probably report its fastest drop in production since 1942, eroding revenue as plunging crude prices limit the amount of cash available to drill for new reserves.
Pemex last year likely extracted 2.8 million barrels a day, down about 9 percent from the 3.08 million a day pumped in 2007, representing a total of $20 billion in lost sales, according to data compiled by the government and Bloomberg. Costs are rising at Cantarell, Pemex’s largest field after declining pressure reduced output in the past five years.
Pemex’s “biggest problems have yet to come,” said Alejandro Schtulmann, head of research at Empra, a political- risk consulting firm in Mexico City, in an interview. “The fall in oil prices and lower production is going to make expensive exploration projects less attractive now.”
Mexico relies on Pemex for 40 percent of its budget. Sliding Pemex output risks cutting supply to the U.S., which gets more oil from Mexico than all countries except Canada and Saudi Arabia.