The US and Mexico are reported to have begun talks on how to conduct oil exploration operations in the Gulf of Mexico beginning in 2011 when a 10-year moratorium expires.
News of the discussions between the US and Mexico came as analysts and officials of the Latin American nation expressed concern over declining production.
The US-Mexico talks are focused on the treaty, signed on June 9, 2000, between the two countries on the delimitation of the continental shelf in the western Gulf of Mexico beyond 200 nautical miles. The treaty specially mentioned the need for cooperation between the two nations, “taking into account the possibility that there could exist petroleum or natural gas reservoirs that extend across that continental shelf boundary.”
New exploration framework
The daily El Universal newspaper said representatives from the two governments have been working together to establish a framework that will avoid conflicts and to develop a strategy on exploring underwater deposits in the area, known to Mexicans as the Hoyo de Dona.
The report follows an earlier statement by Adan Oviedo Perez, director of Compania Mexicana de Exploraciones, that Mexico should promote a treaty for cross-border oil reserve exploitation with the US and make observation of such a treaty by oil firms obligatory.
In June, Oviedo Perez told the Mexican Senate that he would like to see a group formed to prepare such treaty, which would extend cooperation beyond the relatively small area comprised by the Hoyo de Dona.
Oviedo Perez said he would like to see joint operation become the “standard way” concerning exploitation of cross-border reserves in the gulf.
His remarks chime in with observations by some Mexican experts that the exploitation of the waters on the US’s side of the gulf boundary could reduce reserves on the Mexican side.
Migrating reserves?
“When they take petroleum from the American side, our petroleum is going to migrate,” said Francisco Labastida Ochoa, head of the Mexican Senate’s Energy Committee, in a recent interview with Mexico’s Milenio newspaper. Discussions between the US and Mexico came as officials expressed concern over declining production by state-owned Petroleos Mexicanos, which, according to planning director Vinicio Suro, will close 2008 with oil output “stabilized” at 2.8 million b/d.
Still, according to a senior energy official, Pemex will need more than a decade of time to restore its oil production to 3 million b/d—its level of production prior to 2007. “The country needs to get back to these levels by 2020,” said hydrocarbons director Jordy Herrera Flores. “Before that it will be difficult,” he said.
According to analyst BMI, Mexico is suffering from considerable damage due to falling oil production and exports coupled with a rising fuel imports bill. It said such damage highlights the “urgent need” for reform in the country’s “tightly-controlled” upstream and downstream segments.
