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Page added on October 30, 2008

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Mexican energy reforms still keep oil giants shut out

Mexican lawmakers’ decision Tuesday to revamp the country’s oil and natural gas law will provide some new flexibility for oil field service companies doing business there but will keep the door shut on foreign oil companies eager to explore in the crude-rich nation.

“For international oil companies, this does not change the Mexican situation at all,” said RoseAnne Franco, lead analyst for PFC Energy in Washington.
After a raucous session in which leftist lawmakers took over the podium, Mexico’s Chamber of Deputies approved constitutional reforms designed to depoliticize the state-owned oil company, Petroleos Mexicanos, or Pemex, which has been politically controlled throughout its history.

Under the plan, professionals will be named to the Pemex board of directors, now packed mostly with political appointees, and oversight committees will be established for the various Pemex subsidiaries.

That will nudge Pemex closer to the model of Brazil’s state-owned oil company, Petrobras, industry experts say.

Mexico’s oil output, about half of which goes to U.S. Gulf Coast refineries, dropped to 2.7 million barrels a day in September, its lowest level in 13 years. PFC Energy estimates production will slip further to an average 2.6 million barrels a day next year, and Franco suspects that figure may be optimistic.

And the changes to Mexico’s oil law will do little to alter that scenario.

“We really don’t see a plateau on Cantarell’s decline,” Franco said.

Houston Chronicle

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