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Deep-water woes 'may hit Pemex reform'



By Upstream staff 

Planned oil reform in Mexico will be "crippled" if opposition lawmakers water it down to exclude opening up the country's deep-water play to foreign partners, a top executive from state-run oil monopoly Pemex said today.

Pemex's Exploration & Production chief Carlos Morales said Pemex's first deep-water exploration wells had not hit oil, and if foreign joint ventures are deliberately excluded when new laws are drafted, it could be 20 years before Mexico produces a drop of crude from deep waters.

"They might give us more financial resources and more legal capacity, but if they don't give us the ability everybody else has to form partnerships, it will leave the process crippled," Morales told the Reuters Latin American Investment Summit.

President Felipe Calderon hoped to pass an energy law by the end of this month that would allow Pemex to pair up with experienced oil producers to speed up its entry to deep-water oil and shore up declining output and reserves.

But he has hit stiff opposition in Congress, where leftists and many centrists oppose lowering barriers to private capital.

Pemex believes there may be as much as 30 billion barrels of crude waiting to be tapped in the Gulf of Mexico but will struggle to reach it given the high risks, elevated costs and technical challenges of drilling in water several kilometres deep, Morales said.

"We are talking about around 15 to 20 years if we are not able to form partnerships," he told Reuters. "Instead of it being a seven or eight-year process, which is the norm, it would be around double that."

He said Pemex has drilled six exploration wells in waters To date, Pemex has drilled six exploration wells in waters up to 1000 metres deep in the Gulf of Mexico. Two were dry, while four found natural gas.

Drilling will begin in a new area of the Gulf - in water depths of 2000 metres - in September, Morales said.


Thursday, 03 April, 2008, 19:24 GMT  | last updated: Thursday, 03 April, 2008, 20:08 GMT

Problems arise: Pemex exploration and production division head Carlos Morales
 

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