MercoPress. South Atlantic News Agency

Mexico finds massive oil deposits but?.

Mexico's government owned Petroleos Mexicanos, Pemex, has discovered and mapped huge deep water oil reserves in the Gulf of Mexico increasing the country's reserves to the tune of the main league of world producers, reports the Mexican press.

According to conservative estimates the new deposits could represent 54 billion barrels of oil and would increase the country's total reserves to over 90 billion, which could help Mexico expand its current 4 million barrels per day production to seven million, according to Luis Ramirez Corzo, Pemex's Exploration and Production manager. "It would position us in terms of reserves among the major producing countries such as Iraq (112,5 billion barrels), United Arab Emirates (97,8 billion barrels) and Kuwait (94 billion barrels), besides the fact we could reach production levels of Saudi Arabia (7,5 million bpd) and Russia (7,4 million bpd)", explained Mr. Corzo.

Apparently Pemex has invested almost 4,5 billion US dollars looking for oil and gas in the Perdido area, in the Gulf of Mexico "where seven blocks have been clearly identified and mapped with gas and oil extraction potential. Tri-dimensional surveying clearly shows the existence of 45.000 billion barrels".

"That is the good news; the bad news is that given the complexity to access deposits, the technology required and the volume of investment needed, we can't go alone on this", said Mr. Corzo, besides some of the area "is shared with United States".

Pemex is currently drafting joint-venture proposals to invite oil corporations with state of the art technology in deep water extraction and cash to participate in the operation.

According to the Mexican press, risk and opportunity contracts are banned by Mexican law and a new system is being worked out contemplating a compensation mechanism that would include tax rebates, royalties and/or fees. Pemex apparently is targeting Shell, ExxonMobil, British Petroleum, TotalFIna, Unocal and Petrobras.

But Mexican authorities are also concerned with the so called "Popote Effect", that is the draining of the fields by companies working at the other side of maritime borders. This can lead to the first company involved in the operation, either side of the border, extracting virtually the bulk of the field combining gravity, geology and drilling.