The Oil Drum

I have closely watched Cantarell for the last 18 months. My tentative conclusion is that neither the best (-14%/yr) or worst (-40%/year) scenarios are coming to pass. Reality seems somewhere between #2 & #3 with -20% to -25% (early results). New production is coming on-line (as other older Mexican fields decline) and +100,000 b/day seems doable outside Cantarell (for at least a year or two).

I see net Mexican production down only -4% as highly unlikely. I also see at least minimal Mexican oil exports in 2010 (no -40% compounded).

Eaun is way too optmistic IMHO, Jeffrey a bit too pessimistic. But the future is still dark, especially for Mexico & the US.

Mexican oil export income is largely recycled into US imports. We actually have stuff that an oil exporter wants ! This is far less true of other oil exporters (Russia wants what from the US ? Venezuela is moving away from US imports, we refuse to sell to Iran, Nigeria, Norway, etc. traditionally buy little but aircraft & food from the US, KSA seems to be moving away from US imports, China is creating a large new market in Angola, etc.)

KSA can stop using "we have no customers" excuse though.

I keep wondering about what happens when oil soars to 100 euros/barrel and the world decides that they have "enough" US dollars. We can liquidate our foreign investments (gov't nationalizes as UK did during WW I & II ?) to buy "critical" imports for a while, but not for long.

Boeing will grab market share from Airbus (as the weak $ is doing today) but we have few other exports that can be "ramped up".

Best Hopes,

Alan