ajtj99's Market Pulse

[Randy1960]

Big oil find in Mexico, getting very little media coverage:

http://thestar.com.my/news/story.asp?file=/2006/3/14/apworld/20060314072608&sec=apworld

Tuesday March 14, 2006

Mexican President says new deep-water oil found

MEXICO CITY (AP) - Mexico has made a deep-water oil discovery in the Gulf of Mexico that could be larger than the country's giant Cantarell offshore field, President Vicente Fox said on Monday.

The oil find is under 950 meters (3,117 feet) of water and a further 4,000 meters (13,120 feet) underground, Fox said in an interview with Dow Jones Newswires.

The find will be formally announced Tuesday, he said.

"We have been investing $5 billion (euro4.2 billion) a year in exploration, and that work, that investment, is now bearing fruit,'' Fox said.

Original total reserves at Cantarell, Mexico's largest oil field, stood at 11.5 billion barrels but its output has been steadily falling.

Production at Cantarell is expected to decline 6 percent this year, to 1.9 million barrels a day, and decline even more sharply in subsequent years.

Fox said that state oil monopoly Petroleos Mexicanos, or Pemex, contracted a private company to drill the well, and that the result "indicates reserves that exceed those of Cantarell.''

Pemex sees deep-water crude as one of its best bets for replacing reserves and for increasing production as Cantarell declines.

The fastest way for Pemex to get the oil out would be by forming alliances with companies that have the deep-water technology.

However, current laws forbid private companies from exploration and production activities in Mexico except when they are under contract to Pemex.

Energy Secretary Fernando Canales told Dow Jones Newswires the ban on Pemex forming alliances for deep-water drilling would slow down the process of developing the reserves, but won't keep Pemex from getting at the oil.

"We don't need just one, but many wells,'' Canales said.

He declined to give further details of the new oil find.

The Fox administration has been attempting to ease foreign investment restrictions in the state-run energy sector.

But all his initiatives have been blocked by the opposition-dominated Congress.

Nevertheless, Fox said his government has pushed for expansion and development in the oil sector.

"We haven't been sitting with our arms folded,'' Fox said.

Pemex produced 3.33 million barrels a day of crude oil last year, of which it exported 1.82 million barrels.

This year, the company expects to raise production to about 3.42 million barrels a day.

Pemex hit its first deep-water oil in late 2004, when it contracted Diamond Offshore Drilling to drill a well at a depth of 681 meters (2,235 feet) in Campeche Sound, producing an initial flow of 1,200 barrels a day of very heavy crude.

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21 largest oil fields
in the World
http://www.gravmag.com/oil.html

1. Ghawar, Saudi Arabia 75-83 billion barrels

2. Burgan, Kuwait 66-72 billion barrels

3. Cantarell, Mexico 35 billion barrels