February 25, 2010, 5:41PM ET
By CATHERINE E. SHOICHET
MEXICO CITY
Mexico's oil production continues to fall from year-ago levels as the government struggles to implement hard-fought energy reforms designed to boost exploration.
January crude production was 2.615 million barrels a day, a 2.6 percent decline from 2.685 million in the same month of 2009, state-run oil company Petroleos Mexicanos, known as Pemex, reported Thursday.
The bright side is that January output was the highest level in nine months, though still a significant drop-off from the record annual average of 3.4 million barrels a day in 2004.
The majority of oil reserves in Mexico's waters remain untapped because Pemex lacks technology for exploration.
After a hard-fought battle waged by President Felipe Calderon, Congress passed a bill in 2008 intended to give Pemex more flexibility to make exploration deals with foreign companies. Although significantly watered down to win opposition support, the bill was a landmark in a country where state ownership of oil is enshrined in the constitution and a matter of national pride.
More than a year later, however, Pemex has not sealed any new exploration deals with foreign contractors amid red tape and political resistance.
"They have been so delayed because they are very complex, very difficult," Pemex board member Fluvio Ruiz said in an interview with The Associated Press. "It's a very sensitive topic for this country."
Ruiz said it will likely take until the end of the year to finalize any new deals. He said Pemex has been implementing complicated changes mandated by the reform bill, including overhauling Pemex's corporate board to include outside experts.
Meanwhile, international oil companies are cashing in on major discoveries on the U.S. side of the Gulf of Mexico.
McMoRan Exploration Co. and Energy XXI Ltd. shares soared in January after they announced a major discovery. In September, British Petroleum said it had tapped into billions of barrels of oil after digging the world's deepest oil well in the area.
Mexico's government relies on oil revenues for about a third of its budget. Falling production is jeopardizing government programs and hurting the country's credit ratings as it struggles to pull out of one of its worst economic recession in decades.
Mexico is a top oil supplier to the United States, but experts say the country could lose its standing as a major exporter within five years and wind up importing crude if it does not find more oil.
"Everyone is just waiting to see whether or not this legal reform is going to mean anything," said Michelle Michot Foss, head of the Center for Energy Economics at the University of Texas at Austin. "They've been moving very, very slowly."
Pemex estimates Mexico has 30 billion barrels of reserves beneath deep waters on its side of the Gulf. The company has earmarked more than 34 billion pesos ($2.6 billion) for exploration in mature fields and shallow water this year, a 13 percent increase over 2009.
Pemex has drilled about a dozen wells, compared to hundreds of deep-water platforms on the U.S. side.
The Mexican Constitution bars most outside involvement in Pemex, although the company contracts services from some private businesses. The reforms loosen the barriers by allowing Pemex to pay outside contractors a "bonus" -- not a percentage cut -- for any oil they find.
The country's protective attitude toward its oil dates to March 18, 1938, when President Lazaro Cardenas kicked out American and European oil companies that refused to comply with union wage demands while reaping oil profits.
Politics could still get in the way of new contracts.
One leftist lawmaker has proposed creating an independent committee to review all contracts under the new system.
"We don't sell our oil! We defend it!" dozens of leftist legislators chanted during a session of Congress last week.
Source: http://www.businessweek.com/ap/financialnews/D9E3FPB81.htm
Comments
Post a Comment