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Chevron aims at Mexican reserves

April 09, 2008|From Bloomberg News

Chevron Corp. submitted proposals to tap oil and natural gas reserves in Mexico amid declining output from the second-biggest crude-producing nation in the Western Hemisphere.

Chevron, which triggered an energy boom with the 1938 discovery of oil in Saudi Arabia, wants to make Mexico "a big part of our portfolio," along with Brazil and African producers such as Nigeria and Angola, said Ali Moshiri, who oversees the company's oil and gas wells in Africa and Latin America.

So far Chevron's proposals haven't borne fruit, because Mexico's constitution bars foreign oil companies from pumping oil or gas in the country, Moshiri said. Those restrictions probably won't change until the state-owned oil company, known as Pemex, relaxes its monopoly and pressures politicians to change the law.

"The biggest problem in Mexico is Pemex," Moshiri said. "Pemex needs to be more proactive and say, 'We have a lot on our plate and we need help.' The constitution needs to be modified to reflect today's environment."

Chevron's proposals to the Mexican government involve plans to explore for oil in the deepest areas of the Gulf of Mexico and to tap natural gas deposits neglected by Pemex, Moshiri said.

Mexican President Felipe Calderon said last week that he was optimistic that opposition lawmakers eventually would agree to relax controls that have kept Mexico off-limits to international petroleum firms.

Pemex has signed technology-sharing agreements with Chevron, Exxon Mobil Corp., Royal Dutch Shell and other companies.

Calderon favors changing secondary laws rather than the constitution to loosen Pemex's monopoly and allow greater foreign-company participation. Moshiri said that wouldn't work.

"You're not going to ask a major oil company to come there for an itty-bitty project," Moshiri said. "We've got opportunities elsewhere." Changing the constitutional ban on foreign ownership of Mexican petroleum resources is crucial to enticing international companies, he said.

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