Two Hurricanes Heading Directly At PEMEX

Petroleos Mexicanos (PEMEX) is Mexico's state-owned and nationalized petroleom company. It's Cantarell Field is among the largest oil fields in the world. It has produced 12 billion barrels of oil since it was discovered in 1976.

HURRICANE #1

With Hurricane Dean bearing down on it, Reuters reported on Monday that Mexico is closing and evacuating all its 407 oil and gas wells in the main Campeche Sound....slashing its crude output by 2.65 million barrels per day....That is equivalent to just over 80 percent of Pemex's total daily crude output, which in June averaged 3.2 million barrels per day. The closure includes Pemex's huge but dwindling Cantarell oil field

"Right now, a total of 13,317 platform workers are on land and another 1,037 are still on platforms, securing the installations," Pemex said. "The second phase of the emergency response plan consists of the total closure of wells and installations and the evacuation of the workers that still remain on platforms," the oil and gas monopoly said.

Hopefully, this planning will keep everyone safe and minimize equipment damage.

Unfortuantely, no amount of planning will help with the next hurricane:


HURRICANE #2

Fact---Mexico is the 2nd largest exporter of oil to the United States; 1.5 million barrels per day.

Fact---Mexico is the 5th largest exporter of oil in the world today.

Fact---Pemex pays out 60% of its revenue to the Mexican government in royalties and taxes.

Fact---1/3 of the total Mexican federal budget comes from Pemex.

Fact---Oil production from the Cantarell Field peaked in 2003 and is now declining at a rate of 15% per year.

Fact---PEMEX ANNOUNCED ON JULY 27 THAT OIL RESERVES MAY RUN OUT IN 7 YEARS.


Implication: Within several years, Mexico will have gone from one of the world's largest exporters of oil to a net importer of oil.

Implication: This will accelerate the Peak Oil world that we live in today.

Implication: The United States will need to find other sources of oil to replace these imports.

Implication: Mexico will suffer large economic losses; social chaos will probably increase.

Implication: The immigration issue between the two countries will intensify.

Implication: Mexico may adopt a protectionism attitude toward its oil.

Implication: $100 a barrel oil prices.