Mexican regulator calls for reform

by on September 26, 2012 2:36 am GMT

Mexican state oil monopoly Pemex will be unable to fully exploit new deep water finds without the participation and technical expertise of private companies, National Hydrocarbons Commission (NHC) President Juan Carlos Zepeda told Reuters.

“Precisely because we’ve confirmed an important potential, we should urgently modify the legal framework so that Pemex’s effort in deep waters can be complimented,” Zepeda said in an interview with the news agency.

“There’s just no way that one single oil company can develop this deepwater potential alone.”

Mexico’s constitution bars foreign ownership of the country’s oil and gas reserves, which has limited the level of involvement by private companies to essentially service contractors for Pemex.

Mexico has stabilised overall production at about 2.5 million barrels per day after a sharp decline at its largest oilfields.

However, Analysts have warned that Mexico risks becoming a net importer in the next decade if it fails to replace lost output with new discoveries, Reuters reported.

Across the US-Mexico maritime border more than two dozen oil companies drill on average 100 wells per year, while Pemex has averaged about two per year since it started exploring the area in 2006, Zepeda told Reuters.

Last month, Pemex said the Trion-1 well, which lies 177 kilometres off the coast of Tamaulipas state in northern Mexico, was estimated to hold proven, probable and possible reserves of roughly 400 million barrels.

Pemex said commercial crude production could begin in five years, but Zepeda said that a 10 year delay was a time estimate more in line with industry norms.

Zepeda also told Reuters the Trion discovery suggested that nearby deepwater wells, such as Maximino-1, would also prove productive.

“Now Maximino is much more attractive project because we now know that in Perdido there are conditions for a larger oil system,” Zepeda was quoted as saying.

“This changes our expectations enormously.”

According to Pemex data, Maximino-1 contains between 674 million and 1.6 billion barrels.

“(Mexico) needs help finding the dozens of Trions that we need to find, and we also need many companies to help with development,” Zepeda told Reuters, citing the custom-made technologies needed to extract oil from deepwater wells.

Pemex has said that it believes there are up to 29 billion barrels of crude equivalent in the Gulf of Mexico, more than half Mexico’s potential resources.