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 News Around the Republic of Mexico | May 2008 
Mexico Presents Plan to Help Deep Water Oil Output
 Miguel Angel Gutierrez & Jason Lange - Reuters
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Mexico City – President Felipe Calderón sent a proposal to Wednesday aimed at boosting the Mexico's flagging oil production by cutting taxes on crude drilled in certain hard-to-reach areas.
Under the bill, state oil monopoly Pemex would pay less taxes on oil pumped out of deep-water fields in the Gulf of Mexico and at the onshore Chicontepec field northeast of the capital.
“It would mean a minimum in (tax) revenue for the state coming from these fields,” the text of the bill said.
Pemex believes the deep-water fields could hold massive amounts of oil. The company is counting on these deposits and Chicontepec to eventually help make up for a decline in production in Mexico's huge but aging offshore Cantarell oil field.
Pemex, which must pay hundreds of millions of dollars to rent sophisticated oil platforms capable of drilling more than a half-mile beneath the ocean surface, says costs have prevented a big deep-water push.
Energy Minister Georgina Kessel warned last week that Mexico faces an energy crisis within a decade if it does not fix its oil sector. Crude production has fallen to an average 2.91 million barrels per day so far this year from a peak of 3.38 million bpd in 2004.
Calderón sent another proposal to in April to overhaul energy laws in Mexcio, the world's No. 6 producer and a top U.S. supplier.
His main proposal would allow private companies a bigger say in the state-run energy sector. It has been bogged down in , where leftist lawmakers opposing the bill camped out last month until Calderón agreed to hold months of public debates on the plan.
CASH STRAPPED
Pemex, strapped for cash because of a heavy tax load, has been slow in going after oil in fields with high production costs, despite rising energy prices that have helped oil companies develop hard-to-reach fields in other countries.
Taxes paid by Pemex fund about a third of Mexico's government spending, even after two tax cuts in recent years. It was unclear how much Wednesday's proposal would change Pemex's overall tax bill.
Initial seismic tests have suggested up to 29 billion barrels of crude could lay beneath the deepest waters of the Gulf, but Pemex has only drilled a few exploratory wells there over the last few years. None of them have turned up substantial deposits.
Mexico also hopes to expand output at Chicontepec, a sprawl of fields where tricky rock formations make pumping crude more difficult and costly.
(Editing by David Gregorio) |
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