As Mexico’s oil reserves drop, Calderon thinks the unthinkable

The political showdown over the future of Pemex, the Mexican government’s crucial oil monopoly, appears to loom at last.

At stake, people on both sides of the clash say, is the viability of Mexico’s petroleum industry, which ranks as the third-largest source of imported U.S. oil and supplies nearly 40 percent of the Mexican government’s budget.
Pemex — which exports about 1.4 million barrels of crude a day to the United States, most of it through Houston and its environs — has acknowledged that its oil production and reserves are dropping fast.

Many across the political spectrum here agree something must be done, and quickly, to reverse the tide, but the showdown isn’t expected to come for several months. The argument involves whether to invite in American and other foreign oil companies, which have the advanced technology and resources to find more petroleum, and on what terms to do so.

Critics contend that, regardless of what they’re saying publicly, President Felipe Calderon and his allies intend to privatize all or part of Pemex, which since its founding nearly 68 years ago has been both a patriotic symbol and a cash cow for the Mexican government.

“The capacity of Mexico to produce petroleum is declining because our proven reserves are running out,” Calderon said last week in Los Angeles, where he ended a five-day tour of the U.S. “They probably will last nine more years.”

New oil difficult to access
Echoing the view of many industry experts, Calderon argues that a structure allowing private Mexican and foreign investment in Pemex’s development of new reserves is urgent. Most of that new oil lies beneath the deep waters of the northern Gulf.

“The good news for Mexico is that we have petroleum and lots of it,” Calderon said. “The problem is that this treasure is buried beneath the ocean. To reach that oil we need to strengthen Pemex.”

But Calderon’s efforts to push reforms permitting private investment through a Congress controlled by his opponents have been stymied by the resolute resistance of his leftist nemesis, Andres Manuel Lopez Obrador.

Houston Chronicle