There is little question that Mexico’s officials
are having a difficult time accepting
the financial sea change that declining
oil revenues implies. The willingness to
grasp at straws is readily apparent. In March
2006, then-Mexican President Vicente Fox
announced the discovery of Noxal 1 - a
“huge” oil field in the deepwater Gulf of
Mexico containing up to 10 billion barrels of
oil. Fox stated: “With Noxal 1 we will begin a
new era of oil exploration in our country.”
The energy community immediately raised
questions about the size of Noxal 1 and
pointed out the field had never been tested.
Subsequent events have indicated Fox’s view
was not based on geological fact. Tests have
been so disappointing that Mexican oil analyst
David Shields has labeled Noxal 1 “a
confirmed failure.”
Given the broad social, economic and political
ramifications of declining oil production,
it is difficult to fault government officials who
hope for the best. Mexico has: (1) used its oil
reserves as collateral for loans, (2) employed
its oil profits to fund social programs, and (3)
spent much of its increased wealth to develop a
growing middle class with rising expectations.
The grim reality of oil production decline,
and the concomitant erosion of oil revenues,
will take some time to filter through
http://www.peakoil.net/files/Cantarell%20Is%20Not%20Mexico%E2%80%99s%20Only%20Oil%20Production%20Problem.pdf