Pemex Plans Tender to Curb Output at Mature Fields

MEXICO CITY (Dow Jones), Apr. 12, 2010

Mexican President Felipe Calderon said Friday that the first incentive-based contracts tendered by state oil monopoly Petroleos Mexicanos, or Pemex, under a 2008 energy reform will be for mature fields that have the potential to produce more oil and gas using new technologies.

Speaking to reporters at a news conference with Norwegian Prime Minister Jens Stoltenberg, Calderon said Pemex is working toward a closer relationship with Norway's state oil company Statoil, but that joint oil and gas production between the two firms is likely to come in a future round of contracts when Pemex tackles deep-water projects in which Statoil has shown more interest.

"As the prime minister had said, there are enormous opportunities for cooperation between Mexico and Norway," Calderon said in response to a reporter's question.

"On the commercial side, Statoil and Pemex, in accordance with the [energy] reforms approved in 2008 in our country, can engage in incentive contracts, contracts that are much more flexible, much more in line with the competition and productivity that each project deserves and needs. And through these contracts foreseen in the law, there can be, of course, joint activity between Pemex and Statoil," Calderon said.

"We still do not have direct participation [with Statoil], because Petroleos Mexicanos is just beginning the tender process for this type of contracts, and has begun with what are called mature fields, which are fields that have already been exploited, and with new technology available we can extract a little more oil and gas," the Mexican president said.

Calderon said Statoil can bid on the mature field contracts, but that his understanding is that the company is more interested in deep-water projects. "And that round of contracts surely will come later."

Pemex cannot enter into shared-risk contracts under the 2008 reform nor pay them with oil, but can tender performance-based contracts that increase payouts according to production, although opposition lawmakers have threatened to challenge that in the courts.

State oil companies around the world use shared-risk contracts to draw outside investment in difficult and expensive projects, like deep-water drilling. Mexico has potentially significant reserves in its part of the Gulf of Mexico. A variety of oil companies have joined in deep-water projects on the U.S. side of the Gulf.

Pemex is trying to increase its crude production after a slide from its peak output of 3.4 million barrels a day on average in 2004 to an estimated 2.5 million barrels a day this year. The slide is mostly due to declining production at the mature offshore Cantarell complex, which provided decades of "easy oil" that is now running out, Mexican energy officials have said.

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