After declines, Mexico says oil Output to increase in 2011

The Mexican government said a recent downward trend in oil production will conclude between this year and next and that output in 2015 will total some 3 million barrels per day, not far off the country’s all-time highs.

In an appearance before the Senate on Wednesday, Energy Minister Georgina Kessel said that, following recent energy sector reforms, state oil monopoly Petroleos Mexicanos will produce between 2.7-2.8 million bpd in the 2009-2010 period, or similar to the current output.

“Beginning in 2011, a gradual increase in production will begin until we reach levels near or slightly superior to three million barrels a day in 2015,” the minister said.

Mexican oil production peaked at roughly 3.46 million bpd in 2004. – [petroleumworld.com]

But economics could be the bigger hurdle, both for Mexico and other potential sources of U.S. supply. Crude prices have fallen $110 a barrel from their summer highs, and with prices expected to stay low all year, expensive offshore oil exploration is looking prohibitively expensive. That doesn’t just affect PEMEX’s plans to juice more oil production in deep waters, that also affects Brazil, the new darling of deep-water oil and a potential big American supplier.

Of course, Mexico’s pain could be good news for U.S. oil companies. Ever since nationalization, foreign companies such as ExxonMobil have been kept out. But declining production means less revenue for the state, threatening 40% of the government budget. And that is causing some rethinking. Royal Dutch Shell has a big oil find called Perdido in the deep-water Gulf of Mexico, just 20 miles north of Mexican waters. How long before Mexico invites them to explore on their side of the watery border? [blogs.wsj.com]