According to Wall Street Journal article of February 9, 2006 (subscription only) “Mexico’s huge state-owned oil company [Pemex] may be facing a steep decline in output that would further tighten global oil supply and add to global woes over high oil prices”. An internal report, which served as basis for the Journal’s story, covered several possible scenarios of declining production from one of Mexico’s larger oil “pools”. The worst scenario looked at would lead to a reduction of about 63% of Mexico’s daily crude exports to the U.S within two years, according to the Journal. Because Mexico is the US’ second most important supplier, even a ‘moderate case’ scenario could be serious for both countries.

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Mexico’s huge state-owned oil company may be facing a steep decline in output that would further tighten global oil supply and add to global woes over high oil prices. The potential decline faced by Petroleos Mexicanos, or Pemex, also could undermine U.S. efforts to reduce dependence on Middle East oil, and complicate Mexican politics and financial stability. An internal study reviewed by The Wall Street Journal shows water and gas are encroaching more quickly than expected in Cantarell, Mexico’s biggest oil field, and might cause output to drop precipitously over the next few years. Currently, Cantarell produces two million barrels of oil a day, or six of every 10 barrels produced by Mexico. It is the world’s second-biggest-producing field after Saudi Arabia’s Ghawar.

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