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Column 090604 Thompson

Monday, September 6, 2004

 

Alleged Mexico oil find unsubstantiated

 

By Barnard R. Thompson

 

There it was again, a front-page news flash right out of the past as exciting and optimistic as ever.  The headline read that Petróleos Mexicanos, the state-owned Mexican petroleum company that is better known as Pemex, “Found an enormous oil-producing deposit in the Gulf (of Mexico).”

 

In subsequent days and taking the lead from the Mexican media, the news was featured in reports worldwide since the discovery could “put (Mexico) on a par with reserve levels of the big players like Iraq, United Arab Emirates (UAE), Kuwait or Iran,” according to one such piece in the Washington Post on August 31.

 

The Mexico City daily El Universal ran the first piece on August 30, 2004, an interview with Luis Ramírez Corzo, head of Pemex Exploration and Production.

 

“Just as happened in 1978, when the discovery was announced of what was the sixth largest deposit of crude oil in the world, Cantarell, today Pemex has detected and ‘mapped’ productive zones, mainly in deep-waters (of the Gulf of Mexico), with a ‘conservative’ potential equivalent to almost 54 billion barrels of crude oil,” the El Universal piece began.

 

“That volume, added to the current level of 48 billion barrels of crude oil reserves, would bring the resource level to 102 billion barrels and facilitate an opening for Mexico to increase its production average from 4 million to 7 million barrels daily, Ramírez said.  ‘It would put us at the reserve level of large producers like Iraq [112.5 billion barrels], UAE [97.8 billion], Kuwait [94 billion] or Iran [89.7 billion].’”

 

However a number of industry and political analysts were quick to express doubts regarding the announcement, pointing out that the find claims were not based on test drilling or real evidence.  In other words the announced figures came from scientific estimates, that means the purported discovery cannot by categorized as proven reserves (versus probable or possible reserves) which was what Ramírez and the news reports seemed to suggest.  Still others believe the size of the discovery is exaggerated.

 

There were those who saw the hand of President Vicente Fox Quesada in the announcement, coming two days before his annual State of the Nation report and the September 1 opening day of Congress.  The suggestion was that Fox needed the good news to bolster his presidency and stimulate the administration’s goals, not the least being congressional approval of needed yet stalled energy reforms and constitutional amendments to allow broadened private investment for exploration, extraction and modernization in the development cash strapped Pemex.

 

Actually the announcement of yet another crude oil discovery was like déjà vu.  During the presidency of José López Portillo (1976-1982) vast new oil discoveries were announced regularly.  This was during Mexico’s so-called oil boom, when in spite of huge foreign and domestic debts international bankers could not get to Mexico fast enough to lend the government more money every time a new oil discovery was announced.

 

But more money was coming in through the lending then from oil, and the use of new loans as cash flow to pay billions of US dollars in interest alone on earlier debts soon caught up with the López Portillo administration.  And when the international loans dried up on came the economic meltdown of 1981 and the ruin of 1982.

 

It should be mentioned however that now international bankers are not as eager as their predecessors to loan huge sums of money to Mexico on unproven energy finds.

 

Mexican opposition party legislators issued a summons on September 2 for Pemex officials to appear before Congress and testify as to the real extent of Mexico’s oil reserves.  Senator Oscar Cantón Zetina (Institutional Revolutionary Party, Tabasco) is specifically calling for Ramírez, of Pemex Exploration and Production, to explain his recent announcement of a new deep-water discovery in the Gulf of Mexico.

 

Noting that the announcement is an unexpected windfall, especially since Pemex invests virtually nothing in exploration, Cantón said “it makes one suspect that the disclosure of that information is part of a strategy ordered by the U.S. government, in order to bring down international oil prices.”  And he suggested that the Fox government is doing this “dirty work” for the U.S.

 

On September 4 the following appeared in El Universal: “Pemex on Friday said it had not discovered new proven deep-sea (oil) reserves in the Gulf of Mexico.  ‘To date, though we have not discovered hydrocarbon reserves, meaning no exploratory wells have been drilled … we have recognized an important potential,’ Pemex said in a press release.”