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 Business News | July 2007 
Mexican Crude Falling, Will Drop More
 Prensa Latina
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The coming drop in Mexican hydrocarbon production together with a lack of new alternative sources is causing alarm among specialists, who doubt that trend's reversal.
According to experts, the recent Petroleos Mexicanos Oil Company estimations of a 14 percent reduction in the total oil production over these next six years leaves no room for doubt.
This is a somber dark overview because the local economy grew at a higher rate than the Latin American average, thus they need to encourage investments, meet the internal demand, and diversify exports.
International Consultant company analysts associate the reduction in hydrocarbon production to the exhaustion of Cantarell, the largest oilfield in Mexico, the output of which has decreased over 26 percent in the two most recent years.
They warned that at the current pace of exploitation, if another vein like Cantarell does not appear, this country will only have oil to maintain between nine and 13 years at present usage levels.
Politics and Reserves Hinder Mexican Oil
Megan Harris-UPI
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Mexico faces dwindling oil reserves and will have to open the oil and gas industry to the private sector to spur further exploration.
Mexican proven reserves are anticipated to last about nine more years, but there are many other promising potential sources that could extend supply to 28 years, Jose Luis Alberro, director of the Law and Economics Consulting Group, said Friday during a panel discussion at the Woodrow Wilson Center in Washington. These include offshore areas in the Gulf of Mexico, where exploration so far suggests substantial reserves.
But reforming the energy sector is paramount. The public knows that PEMEX, the state oil company, needs reform, but there is little support for the constitutional change necessary to introduce private investment, competition and less regulation.
Resistance to energy reform comes largely from the political left's base, although moderate members of the Party of the Democratic Revolution, or PRD, in Congress are eager to negotiate with President Felipe Calderon, pointed out Pamela Starr, Latin America analyst with the Eurasia Group. Reforms need to be moderate enough to not anger the PRD's base.
Alberro is skeptical that radical changes can be made, but he suggested that a clause in the constitution could be used to open up some private-sector activity in the industry.
But hidden measures are likely to have limited results, said Luis de la Calle, managing director and founding partner of De la Calle, Madrazo & Mancera S.C., who believes that the Mexican public can be convinced that the changes are positive.
Another key issue in the debate is pensions, which some fear will be compromised by changes to PEMEX. De la Calle suggested linking pension reform to energy-sector reform.
Alberro described a worst-case scenario of a 50-percent reduction in proven reserves in 10 years, leading to an economic collapse in Mexico. The best scenario is based on regulatory reform, which opens up the sector to private investment and leads to new exploration and production. |
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