Pemex Plans Two New Deepwater Exploratory Wells in 2007

MEXICO CITY Mar 06, 2007 (Dow Jones Newswires)

Mexican state oil monopoly Petroleos Mexicanos, or Pemex, plans to drill two new exploratory wells in deepwater this year, a company official said.

Carlos Morales, head of Pemex's exploration and production division, said in a conference call with analysts that the wells will be drilled in the deepwater area called Coatzacoalcos Profundo.

Based on seismic studies, Pemex says there could be 10 billion barrels of crude equivalent in Coatzacoalcos Profundo, out of a potential 29.5 billion barrels of crude equivalent in all of Mexico's deepwater territories.

Pemex began exploring the Coatzacoalcos Profundo area in 2004, although Morales said Tuesday that the company doesn't expect to be producing oil from deepwater before 2014.

Deepwater is seen as one of the long-term solutions to replace dwindling output from the giant offshore Cantarell oilfield.

Pemex recently expanded a collaboration agreement with Brazilian state oil company Petroleo Brasileiro, or Petrobras (PBR), which has a lot of experience and know-how in deepwater drilling.

Mexico's energy laws don't allow Pemex to form joint-ventures to exploit oil and gas reserves with private or foreign companies, however.

Among current projects to substitute Cantarell production is Ku-Maloob-Zaap, where Morales said crude output this month has reached 500,000 barrels a day.

Output at Cantarell fell to 1.79 million barrels a day in 2006 from more than 2 million barrels a day in 2005, and is expected to average 1.53 million barrels a day this year.

Pemex's overall crude production last year was 3.26 million barrels a day, compared with 3.33 million barrels a day in 2005. Output so far this year is 3.18 million barrels a day, Morales said.

Of Pemex's $14 billion investment budget for this year, $12.3 billion is for exploration and production, including about $1.5 billion for exploration.

Copyright (c) 2007 Dow Jones & Company, Inc.

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