Mexico's Pemex Says Half of Gulf Crude Lies in Deep Water

MEXICO CITY, Apr 19, 2005 (Dow Jones News via Comtex)

Mexican state oil monopoly Petroleos Mexicanos (PEM.YY) said Monday it still reckons it has about 54 billion barrels of crude equivalent in and around the Gulf of Mexico.

About half of those prospective reserves - 25 billion barrels - lie in what Pemex considers deep water, at depths of 500 meters or more, the company said in a statement.

The rest of the possible crude reserves in Mexico's portion of the Gulf lies closer to the surface or onland, and are therefore easier for Pemex to extract with the company's existing technology.

Pemex's Gulf of Mexico estimates have been gleaned from seismic studies and geological models.

Pemex officials have been lobbying for greater foreign investment in an effort to tap deep water reserves sooner than the company considers it could reach the crude by itself.

Pemex invests about $10 billion a year in exploration and production, although private sector companies estimate that for deep water reserves alone, the oil giant will need to spend around $20 billion a year.

That sort of funding is difficult to come by in Mexico, since Pemex's budget is tied to the federal budget and the country's energy industry has been mostly closed to private investment since 1938.

Pemex produced 3.4 million barrels a day of crude last year, making it the world's third-largest oil company. That output resulted in net sales of $69.1 billion, but taxes and royalties led to a net loss of $1.26 billion.

As of the end of 2004, Pemex had the crude equivalent of 46.9 billion barrels of total proven, probable and possible reserves.

The company hopes to have a replacement rate of 65% by 2008, which would be an improvement over the 57% rate in 2004.

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