Mexico's Calderon: BP's Deepwater Find A Wake-Up Call

MEXICO CITY (Dow Jones Newswires), Sept. 4, 2009

Mexico needs more reforms to rapidly tackle the deep waters of the Gulf of Mexico and shore up plummeting domestic oil production, President Felipe Calderon said Thursday.

Calderon said BP PLC's giant deepwater oil discovery in the Tiber field, announced Wednesday, should serve as a wake-up call for Mexico. State-run Petroleos Mexicanos is legally blocked from teaming up with foreign oil companies that have more experience in the area.

"I hope this sign from the Gulf of Mexico tells us something," said Calderon in a radio interview. "It's very likely we have similar [oil] wealth, but we don't have, whether or not you want to admit it, the technology or the organizational and operational capacity to do it by ourselves."

Calderon said Mexico needs more legal reforms to allow the country to tap deepwater oil fields as fast as possible. Pemex, as the state oil company is known, already has its hands full trying to stabilize production at the country's traditional oil fields, where output has fallen nearly 25% since peaking in 2004.

Mexico revamped its energy laws in 2008 to give Pemex more autonomy and make it easier to hire outside oil companies as contractors. Still, Pemex is blocked from setting up joint ventures for expensive and technically challenging projects such as Tiber.

At Tiber, BP has two partners, Petroleo Brasileiro SA and ConocoPhillips. "British Petroleum can't do it by themselves, or Petrobras or any company," said Calderon.

The Tiber field is estimated to contain 3 billion barrels of oil, although only a fraction of that may ever be extracted.

In recent years, Pemex has drilled 10 wells in waters deeper than 1,640 feet and discovered significant volumes of crude and natural gas at some of them. Still, the company doesn't expect to see the first deepwater production until 2015.

Mexico has two platforms carrying out exploration drilling in deep areas of the gulf, and has ordered three more, which will arrive in 2010. The SS Muralla III, which will arrive in late 2010, can drill in up to 10,000 feet of water.  

Copyright (c) 2009 Dow Jones & Company, Inc.