Lagniappe
Carlos
Macias:
Deepwater
Troubles
Last week, Pemex declined an invitation to join Petrobras
as a minority partner in a deepwater exploration in the U.S.
side
of the Gulf of Mexico. This despite Pemex’s twin problems
of declining production and limited exploration capacity to tap
large oil reserves in deeper waters. The conundrum rests now
in how to get to those reserves without the technical ability
and with constitutional hurdles barring privatization of the
government’s energy monopoly.
Pemex’s production woes are not new and, according to
the Energy Information Administration, Mexico’s proven
oil reserves continue to fall. Cantarell, once the world’s
biggest offshore oil field, reached its peak production capacity
in 2004, but has seen production rates shrink by 500,000 barrels
of oil a day.
In early
February, Mexican Energy Secretary Georgina Kessel predicted
that Mexican oil production would drop by another 200,000
barrels in 2008. She also stressed that Mexico holds roughly
100 billion barrels of equivalent crude oil, saying the country
has “plenty of oil, but we need to find ways of turning
these reserves into production and into resources for the Mexican
people.” In a report setting out a five-year strategy,
the energy ministry reports that total oil production could declice
by 2.5 million barrels a day.
Mexico’s President FelipeCalderón—who served
as energy minister in the Fox administration—echoes Kessel’s
concerns. During his recent tour of the United States, he said, “The
problem is that this treasure is buried beneath the ocean. To
reach that oil we need to strengthen Pemex.” To meet that
goal, Calderón has worked to push through reforms of constitutional
law (PDF), which keeps Mexico’s hydrocarbons in the hands
of the state. Mexico was the first developing country to nationalize
its oil industry, expropriating U.S. and British holdings in
1938. As the Economist notes, Pemex’s failings are related
to “two wasted decades in which governments have milked
Pemex of cash which it might otherwise have invested.”
But Calderón’s efforts to open up Pemex to private
investment have hit a roadblock in Mexico’s opposition-controlled
Congress. As a Houston Chronicle analysis reports, opponents
to the reform say the Calderón administration paints a
dark future for Pemex to rally support for privatization. Among
the critics stands Calderón’s political adversary
Andrés Manuel López Obrador, who lost the presidential
election by a hair in 2006. The former Mexico City mayor argues
that rooting out corruption would serve to fix Pemex’s
troubles. López Obrador may be able to strike a chord
among Mexicans who remember a former privatization by President
Salinas de Gortari’s, which gave Mexican billionaire Carlos
Slim a monopoly over the telecommunications industry. As Newsweek’s “Why
It Matters” blog reports, Calderón must ensure that
reforms occur “under circumstances that primarily benefit
the Mexican people.”
Enter energy
giant Petrobras, which could serve as a role model—and
potential partner—for Pemex. The Brazilian firm’s
aggressive energy exploration policy led to two major offshore
oil discoveries in 2007 plus more ventures in the U.S. Gulf Coast,
West Africa, Turkey, Colombia, and, recently, Cuba. While Mexico
began deepwater exploration in 2006, Petrobras drilled its first
deepwater well in 1992, at a depth of more than 3,250 feet deep.
The company has hit some hurdles along the way, such as a failed
$135 million exploration venture with ExxonMobil and Colombian
state-owned Ecopetrol in the Caribbean coast. Still, Petrobras,
which the government maintains a 55 percent stake in and which
began accepting private investment in the early 1970s, has been
recognized as a model for other national oil companies to follow.
For now, Pemex has turned down Petrobras’ partnership offer;
energy reform could open the door to similar agreements in the
future.
Carlos
Macias is
a graduate from Baruch
College- City University of New York of in Business Journalism
and History. Petroleumworld
does not necessarily share these views
Editor's
Note: This commentary was originally published by The Council
of the Americas web site, on February 21 2008. Petroleumworld
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Petroleumworld News 02/22/08
Copyright© 2008 Carlos
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