Pemex: Mexico Energy Reform to Attract Some New Firms

MONTERREY, Mexico (Dow Jones Newswires), May 29, 2008

A Mexican energy reform bill will attract new players to team up with state-run Petroleos Mexicanos to develop untapped oil zones, including deep waters of the Gulf of Mexico, Petroleos Mexicanos President Jesus Reyes Heroles said Thursday.

The reform calls for incentive-based oil service contracts and lower taxes to make high-cost projects economically viable. Critics say major oil companies would prefer joint venture contracts that allow them to share oil production with Pemex, which is currently illegal in Mexico.

"There are companies that are clearly interested," said Reyes Heroles at a press conference. "They are international oil companies with deepwater experience."

Reyes Heroles declined to name any firms he has held talks with, and said these companies are waiting to see what Congress eventually approves. He also said some companies have said the reforms would not lure them into the Mexican market.

Reyes also said the reform bill falls short of what the country needs to rapidly develop the oil industry.

"This is not the ideal reform for Pemex."

Pemex had been pushing for joint-venture projects for the Gulf of Mexico, but decided such a reform would not be politically viable in Mexico, a country where oil nationalism dates back to 1938 when it expropriated foreign oil assets.

Left wing parties in Congress oppose the reform, calling it a privatization. But Energy Minister Georgina Kessel has said the country's political parties are reaching a consensus on the need to pass a reform bill to boost production, which fell to a nine year low in April.

Copyright (c) 2008 Dow Jones & Company, Inc.