Mexico's energy crisis has arrived

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I wonder where the US is going to make up for Mexico's loss?

http://www.macleans.ca/topstories/business/article.jsp?content=20061113_136459_136459

For decades, PEMEX did well for the country, managing to explore, produce, invest and pay taxes. Its conventional reserves grew to the point that Mexico ranked third in the western hemisphere, after Venezuela and the U.S. (Canada now ranks first, thanks to the Alberta oil sands). Oil prices rose, production increased, and the Mexican government became addicted to PEMEX's revenues. Instead of relying on taxation to finance expenditures, like most developed countries, the government took what it needed from PEMEX. The federal purse now takes more than 60 per cent of company revenues, which provide a third of the national budget. In spite of record high oil prices, PEMEX has run up massive debt and recently posted a net loss of US$7 billion for 2005.

The company is starved for investment funds to improve production in mature fields, such as the mammoth Cantarell -- where current production of almost two million barrels per day is projected to fall by 30 per cent in the next two years -- and to develop new discoveries such as the potentially vital Chicontepec field. As things stand currently, Mexico only has 10 years of oil reserves left.

The story on natural gas is even worse. Mexico's reserves have declined from 56.1 trillion cubic feet in 1999 to 48.6 trillion in 2005. Although PEMEX has managed to increase production slightly in the last three years, consumption has considerably outpaced domestic supply, forcing the country to become a net importer from the U.S. This trend is expected to continue.

The severe shortfall of investment funds has also impacted the refining sector. In spite of its considerable oil production and exports, Mexico is a net importer of refined petroleum products, especially of gasoline. Problems are already beginning to surface. Mexico has seen its regional influence wane as Venezuela takes a greater role in subsidizing oil for Caribbean and Central American countries, and the impact on North America won't be far behind.