Statesman: Mexican Oil...

Just finished reading an article in the Austin American Statesman on the state of the Mexican oil industry. The article examined the state of Petroleos Mexicanos (Pemex), the nationalized Mexican oil company in relation to American companies that are drilling in the Gulf of Mexico. Apparently Pemex doesn't have the money or the know-how to develop deep sea oil fields and American companies do. There is a potential dispute in the works since it appears that Shell oil is developing oil fields that may or may not cross the international border, something the Statesman dubbed the "drinking straw effect" whereby oil platforms tap into a well that spans two countries or regions.

The subtext of course is that Mexico's oil production is collapsing, down 9 percent to 2.87 million barrels a day in the first 4 months of 2008, according to an article in the International Herald Tribune. And so Mexico is searching for ways to improve its oil output. The platform in discussion in the article would only be good for 100,000 barrels of oil per day, less than 1/10th of 1 percent of world demand, and about 4/10ths of 1 percent of current US demand.

Of course the article ends thusly: " 'The easy oil is gone' said Russ Ford, Shell's technical vice president for the Americas." Unfortunately the phrase 'peak oil' wasn't mentioned at all in the article, but the undercurrent of the article is clear: oil is becoming more scarce, and so more developed industries are looking to whatever fields they can, especially to those in countries where the oil industry has been nationalized -- such countries being typically less technologically savvy and geared more towards providing inexpensive oil for its citizens.

Allowing foreign companies to develop Mexico's oil fields would be a change of course for Mexico, who has traditionally protected its oil reserves from outside according to the article in the Statesman.

Look for such trends to continue in the coming years, with the requisite concern in the host country about allowing foreign intervention. Wars have started this way, but the article pointed to interest in changing Mexican law to allow foreign companies to develop Mexican-owned oil fields.

--Jon