Looking to the future: Jesus Reyes Heroles
Pemex weighs up its options
Mexican giant Pemex may drill for crude outside Mexico for the first time unless lawmakers approve hiring foreign partners for domestic offshore projects, according to reports.
Company boss Jesus Reyes Heroles said Pemex may court partners on the US side of the Gulf of Mexico, off the coast of Cuba and in Latin America unless Congress adopts oil reforms proposed by President Felipe Calderon.
He added Pemex needs foreign help because it does not have the technology to drill in water deeper than 500 metres.
"If we can't learn it here, we have to learn somewhere else," Reyes Heroles told Bloomberg, in an interview in Mexico City. "We could partner with other companies."
Pemex pumped 11% less oil in June than a year earlier as production from the Cantarell field declined by 35%. The drop is costing Mexico $20 billion a year in lost revenue at a time when oil prices are at record highs, according to the Energy Ministry.
Mexico's Congress wraps up more than two months of hearings on Calderon's oil bill today. The country nationalised its oil industry in 1938 and enacted a constitutional ban on foreign energy investment to protect its resources.
Calderon's proposal stopped short of asking Congress to change the constitution. Instead, he wants to ease restrictions that would allow foreign companies to help explore, produce, refine and transport oil, though they would not own the reserves. Congress may call a special session to vote on the reform legislation.
If the legislation is approved, Pemex would seek as much as $15 billion of funding annually for deep-water development, double the company's current exploration and production budget.
The company estimates it has the equivalent of 30 billion barrels of oil reserves in deep-water deposits.
Pemex would prefer to drill in its own territory because "we think the probability of success would be higher than in the U.S. Gulf of Mexico", Reyes Heroles told Bloomberg.
Oil production dropped for four years to 2.8 million barrels per day in the first half of 2008, short of Pemex's goal of pumping 3 million bpd.
Pemex could exceed the target if it was allowed to hire foreign companies to assist in tapping deepwater deposits, Reyes Heroles said.
"We basically think that we would revise substantially our strategic plan, especially in the medium term, if the reform is passed," he said.
The company has partnership opportunities abroad. Brazil's state-controlled oil company, Petrobras, offered Pemex a 10% stake in a venture to explore an area of the US Gulf of Mexico known as El Perdido Foldbelt. Pemex may also explore for natural gas in Latin America, Reyes Heroles said.
Reyes Heroles told the news agency he is optimistic Congress will approve the bill even if changes are required.
"There's awareness from practically every political party that the reform is needed," he said. "The group of changes that was proposed are indispensable to really give Pemex an injection of oxygen."