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Mexico sees crude output recovering by 2011

ROME (Reuters) - Mexico’s faltering crude oil output should begin to recover next year or in 2011, Energy Minister Georgina Kessel told Reuters on Sunday.

Mexico, whose oil exports plunged 18 percent in April to levels unseen since 1990 outside hurricane seasons hopes to see its crude oil output rise to 3 million barrels per day by 2015, Kessel said.

“We expect that by next year or the year production will begin to recover to the kind of levels that we had previously,” Kessel said in an interview on the sidelines of a meeting of the Group of Eight energy ministers in Rome.

Crude export volumes tumbled to 1.177 million barrels per day as yields at Mexico’s aging Cantarell field continued to plummet, state oil monopoly Pemex said last week.

Oil production declined 4.2 percent year-on-year to 2.642 million bpd in April, the fourth month in a row below a targeted level of 2.7 million bpd.

Oil revenues are a key plank of Mexico’s economy and the slide in exports was the latest gloomy data for a country already knocked into recession by a drop in U.S. demand for its factory exports.

“We’ve been facing a decline in our most important field, so we are currently working in other areas, particularly at Chicontepec, to make up for that,” Kessel said. “Cantarell is a mature field, in a declining phase.”

“By 2015, we hope we will reach the 3 million barrels per day that we had in 2005/06,” she said.

The government depends on oil earnings to fund more than a third of its budget. The head of the central bank warned this week that a plan to wean Mexico off of its dependence on oil was urgently needed given the dim prospects for boosting output in the medium term.

Mexico is a top three oil supplier to the United States but production has declined steadily since 2004 as the country struggles to replace capacity lost at Cantarell.

Cantarell, which was pumping more than 2 million bpd in 2004, yielded only 713,000 bpd in April, down more than 35 percent from a year ago, according to energy ministry data.

Pemex has vowed to end 2009 with oil output at 2.7 million bpd. Executives say meaningful increases in production from the Chicontepec onshore project starting in July should reverse the trend of declining output in the first half of the year.

But analysts remain skeptical that Pemex will be able to achieve its production goals at Chicontepec, where billions of barrels of crude oil are tightly locked in isolated geological formations, making oil production costly and challenging.

Additional reporting by Robert Campbell in Mexico City; Editing by Dan Lalor

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