Pemex Needs Foreign Aid in Mexico's Oil Patch

Cantarell Field
(Click to Enlarge)

Cantarell Field
(Click to Enlarge)

CANCUN, Mexico (Dow Jones), Apr. 2, 2010

Mexican Energy Minister Georgina Kessel said Wednesday that state oil monopoly Petroleos Mexicanos needs the help of international oil companies, like the ones attending the International Energy Forum here, in order to reverse the decline in its crude output.

"The fields that we are approaching now in Mexico are much more difficult to access," she said at a news conference during a break in the forum's private meetings.

"What this means is that we require, in one way or another, the collaboration of other companies on an international level precisely in order to recuperate our levels of production," Kessel said.

She noted that crude output by Pemex, as the firm is known, peaked in 2004 at more than 3.3 million barrels per day on average, and is currently at about 2.6 million per day.

The "easy oil," as she has called it, is running out in part because of the decline of the supergiant Cantarell field in the Campeche Sound after decades of high production.

The fall in crude output "makes it necessary for us to incorporate better operating capacity at Petroleos Mexicanos, and we also need new technology," Kessel said.

The participation of international oil companies at the forum offers an opportunity for Kessel and Pemex officials to hear what the oil majors say they need in order to be attracted to coming incentive-based contracts.

Exxon Mobil Corp. Chief Executive Rex Tillerson told Dow Jones Newswires Tuesday that Exxon, the largest publicly traded oil company by market capitalization, is trying to be a "constructive participant" in Mexico's bid to open up its oil patch.

Under changes within a 2008 law, Pemex can offer contracts that reward producers based on productivity, but it cannot engage in shared-risk projects. Opposition lawmakers are challenging the constitutionality of that law in the courts.

Tillerson said ExxonMobil is sharing its views with Mexican authorities on "what we think is necessary" for the country to attract the investment it seeks.

Tillerson said the government needs to provide greater incentives to international oil companies.

"What should be most important to resource owners is how to recover the maximum number of barrels," Tillerson said, adding that the government should figure out how to share the oil bounty with international oil companies so "that they can get sufficient reward for the risk they're taking."

Pemex officials have said they feel confident the company can meet its goal of producing 2.5 million barrels of crude a day on average in 2010 and then move upward from there.

They point to two new finds in the Campeche Sound with more than a billion of barrels of crude each in total reserves, along with increasing output at oil fields other than the mature Cantarell complex.

Copyright (c) 2010 Dow Jones & Company, Inc.


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