Mexico energy debate divides parties
The debate unfolds in Mexico's Senate, where the energy bill includes lower taxes and more flexible, incentive-based contracts for deep-water projects while Pemex says its future hinges on deep-water oil, some independent experts call it a huge waste of money and resources.
All three of Mexico's major political parties agree Pemex needs to act fast to reverse the troubling production trend, but differ over where to focus spending.
Mexico's oil production has fallen, peaking at 3.4 million barrels a day in 2004, and the country needs to bring new production on line, said Dow Jones Newswires.
"Moving into deep-water is not a matter of choice, it’s an obligation, a responsibility to future generations," said Carlos Morales Gil, the head of exploration and production at Pemex.
Pemex says it needs 500,000 bpd of deep-water production by 2021 to maintain total crude output above 3 million bpd.
Mexican oil engineer Ricardo Prian Caletti said Pemex should focus on the shallow waters of the Gulf of Mexico and new areas on land, "not in deep-water, where the investments are large and the risks very high."
Mexican oil engineer Eduardo Barrueta Zenteno agreed saying the company should focus on 40 potential oil finds in shallow waters, where it's cheaper to get the oil out of the ground, before moving further out into the Gulf, said the news agency.
"Deep-water needs to be studied more," he told the Congressional forum yesterday.
Pemex said it has 53.8 billion barrels of potential oil reserves, of which 54.8% are in waters deeper than 500 metres. The rest is in shallow waters of the Gulf and on land.
Pemex found support from Gustavo Bonilla Perez, a Mexican oil engineer who advises private firms.
"Deep-water development in the Gulf of Mexico is a huge challenge for Pemex, but under no circumstances should it be abandoned," he told lawmakers.
The ruling National Action Party or PAN is the only party openly defending deep-water development.
The Democratic Revolutionary Party or PRD is firmly against the incentive-based oil service contracts included in the reform proposal.
Pemex says these are needed to lure outside firms into risky and expensive deep-water projects, while the PRD calls it a masked privatisation of the industry.
PRI lawmaker Alberto Amador Leal questioned the logic of deep-water development when a large portion of Mexico's oil reserves are still on land and in shallow waters.
With the PRD firmly against Calderon's bill, the PAN needs help from the PRI to push it through Congress.
The government hopes to have the bill approved before the end of this year.