$900 bn needed to develop deep-water reserves: Mexican firm

Mexico City, July 31 (IANS/EFE) Mexican state oil monopoly Petroleos Mexicanos said some $900 billion must be invested to develop its deep-water oil reserves in the Gulf of Mexico, estimated at 27 billion barrels.

The head of Pemex's exploration and production unit, Carlos Morales, gave that figure in an interview published Monday by the Milenio daily, noting that the company only invests "$15 billion annually" in deep-water wells.

At that rate and without enlisting partners to share the investment cost and contribute specialized personnel and the necessary technology, the process of developing the Gulf of Mexico fields "will take 60 years", the chief of Pemex Exploracion y Produccion said.

The executive acknowledged that "discovering crude (in deep water) and going after it has posed a challenge, firstly in training people, hiring the necessary equipment and later carrying out the well drilling, as well as managing the development project".

However, he said Mexico needed to define Pemex's development model as soon as possible because that will enable the company to determine its investment outlay and exploration strategies, the paper said.

The government plans to present an energy-overhaul plan in August or September aimed at defining Pemex's future and bolstering that sector.

President Enrique Peña Nieto's administration has said only that the overhaul will be far-reaching, emerge out of political consensus and seek to modernize the state-owned company with private-sector participation.

In addition to partnerships with other companies, Morales said it was important that Pemex manage its budget autonomously and have a corporate governance model that makes it more agile in its decision-making, the paper reported.

Pemex, the world's fifth-leading oil producer, has a monopoly on the production of hydrocarbons and refined products in Mexico.

Though production has recently stabilized and the country said last year it had achieved a reserve-replacement ratio of 100 percent, Mexico's output has suffered from the natural decline of the once-super giant Cantarell shallow offshore field and a lack of sufficient investment.

In addition to exploring deep-water areas in the Gulf of Mexico, Pemex also is looking to boost energy production by assessing its non-conventional reserves.

--IANS/EFE

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