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Archive for Tuesday, July 25, 2006

Major Gulf oil field appears to be declining

July 25, 2006

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— Output at Mexico's most important oil field has fallen steeply this year, raising fears that wells there that generate 60 percent of the country's petroleum are in the throes of a major decline.

Production at Cantarell, the world's second-largest oil complex, in the shallow Gulf of Mexico waters off the shore of Mexico's southern Campeche state, averaged just over 1.8 million barrels a day in May, according to recent government figures. That's a 7 percent drop from the first of the year and the lowest monthly output since July 2005, when Hurricane Emily forced the evacuation of thousands of oil workers from the region.

Though analysts have long forecast the withering of this mature field, a rapid demise would pose serious challenges for the world's No. 5 oil producer. The oil field has supplied the bulk of Mexico's oil riches for the last quarter of a century, and petroleum revenue funds more than a third of federal spending.

It would also be bad news for the United States, for which Mexico is the No. 2 petroleum supplier behind Canada. And it could exacerbate tight global supplies that have kept oil at record prices.

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