Mexico Squanders Chance to Benefit From Oil Rally

Since Pemex discovered the 162-square kilometer Cantarell field oil deposit off the coast of the Gulf of Mexico in the late 1970s, it has done little to diversify production. The field, which accounts for more than two-thirds of production, is set to decline in output early next year, said Elizondo at his Mexico City office.

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“We’re at the point of losing the company’s wealth,” Ramirez told a group of lower-house deputies and senators in Mexico City before the new term of congress started today. “We can’t continue contracting debt.”

The 56-year-old executive made the strongest appeal yet for Mexican legislators to begin easing six decades of restrictions that have limited international investment in the industry and kept Petroleos Mexicanos’ financing a political decision. Mexico, the world’s fifth-largest oil producer, may see production fall by 2008 and be forced to import oil in 12 years unless it finds funding to explore for new deposits, Energy Minister Fernando Elizondo said in an interview on Jan. 26.

“The current path they’re on is certainly unsustainable,” said Jed Bailey, director of Latin America research at Cambridge Energy Research Associates in Cambridge, Massachusetts.

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