President Bush Met with President Fox in Cancun, Mexico
(3/2006)
Part of their speeches included energy. Is there a deal in the works for the big oil
companies?
Vincente Fox said, "we want to achieve the construction of refineries for oil,
different docks to build natural gas, sources of electric energy on the other hand, and
conversion of natural gas, liquid, fluid gas to natural gas. It is a program that we shall
approve next May, the Central American countries and Mexico. And we are cordially
inviting the United States to attend to know, to observe, to see the project, so
as to know, how can we interact with the strength and the capacity of
North America so as to integrate a strong development and solid process in the Central
American countries.
The United States consumed 20.7 million barrels per day of petroleum in 2005, of which 6
million barrels originated from sources (net total supply) in the Western Hemisphere,
especially from our border countries of Canada and Mexico. In 2005, net imports accounted
for 58 percent of U.S. total petroleum consumption. Thirteen countries in the Western
Hemisphere provided 49 percent of the United States' gross imports of crude oil and
petroleum products, according to Energy Information Administration (EIA) analysis. Our
neighbors in the hemisphere make up three out of our top four suppliers - Canada, Mexico
and Venezuela - with the Canadians holding the top spot among all suppliers of crude oil
and petroleum products. These three countries accounted for 39 percent of U.S. gross
imports in 2005.
Petroleos Mexicanos, the world´s third-largest oil producer, risks declining output for
the first time in seven years unless lawmakers allow for private investment, cutting
supplies on the world market as demand increases.
Pemex Chief Executive Officer Luis Ramírez Corzo said Mexico will leave billions of
barrels untapped in deep Gulf of Mexico waters and in a costly onshore
field without partners to provide technology and share risks. Mexican law allows only
Pemex to extract oil and gas and to refine crude, barring companies such
as Exxon Mobil Corp. and Royal Dutch Shell Plc from investing in the industry.
The country since 1979 has pumped the majority of its oil from Cantarell, the world´s
second-biggest field by production, and reinvested little on other deposits, Ramírez
said. With Cantarell supply declining for the first time this year
The Mexican Congress has rejected calls by President Vicente Fox to amend the constitution
to permit foreign companies to join with Pemex on concern the law change would be a step
toward selling the state company to private investors.
PRESIDENTIAL HEADACHE
Mexico´s next president, who takes office following July 2 elections, and Congress will
grapple with one of Pemex´s biggest challenges since it was cobbled together 68 years ago
from expropriated U.S. and U.K. oil companies.
The country can choose to keep its oil industry closed and struggle to maintain supplies,
or it can allow Pemex to take on partners and double oil output to 6 million barrels a day
in 15 years. Production now is about 3.3 million barrels a day.
The long-term solution to replace Cantarell will require investment of US$17 billion a
year to tap deep-water deposits and an onshore field called Chicontepec, which now
contains 40 percent of Pemex´s proven, probable and possible oil reserves.
Pemex has drilled its first exploratory wells in deep water and announced it may have
discovered a field with 10 billion barrels of oil. It will take up to a decade to develop
the deposit.
To tackle Chicontepec and deep water, they need to have a legal framework in which to work
with other companies in strategic alliances. To insist that Pemex alone can develop a
project of this nature isn´t realistic. Pemex will also search for oil in Veracruz state,
in southeastern Mexico, and Tamaulipas, on the border with the United States.
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