Mexico gas E&P may see private sector funding

Jan. 22, 2001
Petroleos Mexicanos Dir. Gen. Raul Munoz Leos has said that there is a possibility of private investment in natural gas exploration and production in Mexico by means of service contracts.

Petroleos Mexicanos Dir. Gen. Raul Munoz Leos has said that there is a possibility of private investment in natural gas exploration and production in Mexico by means of service contracts.

This was the first time since 1950 that a Pemex director general has voiced or defended a policy to permit private investment in E&P, according to George Baker, petroleum analyst and director of the Houston-based newsletter service Mexico Energy Intelligence.

The notion of private investment in Mexico's upstream sector, currently forbidden by the country's constitution, has long been considered a taboo subject for discussion in Mexican political circles. But such talk is becoming more open in Mexico under the new regime of Pres. Vicente Fox, who recently made his own comment about the desirability of such investment (see quote box, p. 20).

State oil and gas company Pemex, with a longstanding monopoly over virtually all of the country's petroleum industry, has long resisted private investment in the oil and gas sector of Mexico. But Pemex faces a major hurdle in developing enough natural gas production to meet domestic demand in the coming decade (see special report article, p. 70).

Munoz Leos made the comment in an interview that appeared in the Mexico City daily El Sol Jan. 13.He also said that Pemex's production cost of gas was about $2/MMbtu, not the $0.60/MMbtu that private industry in Monterrey had recently claimed in connection with its demand that the price of gas in Mexico be standardized at $3/MMbtu (see related story, p. 18).