Mexico may have found billions of barrels in new potential oil reserves deep beneath the ocean, but it lacks experience in deep-water drilling and suffers from a historical aversion to hiring foreign companies for such projects.
State oil monopoly Petroleos Mexicanos, or Pemex, said last week the company has mapped out seven blocks of potential hydrocarbon reserves that could contain 54 billion barrels of oil, 45 billion of that under deep water in the Gulf of Mexico.
Some say the estimates of the new reserves may be too optimistic. But even if the oil is there, Mexico may have hard time getting at it.
Luis Ramirez Corzo, Pemex head of exploration and production, told the Universal newspaper that Pemex doesn't have the technology to extract the oil, and is talking to foreign oil companies about ways of forming alliances to exploit deep water resources.
That sent up a red flag at Congress, where some opposition legislators are already leading legal challenges to the 15-year and 20-year multiple service contracts that Pemex has awarded foreign and Mexican companies to develop natural gas fields in northeastern Mexico, charging they violate a constitutional ban on oil and gas concessions.
Ramirez's announcement, three days before President Vicente Fox's fourth state of the nation address to Congress, also raised eyebrows because of its apparent optimism.
David Shields, a local energy analyst, took Pemex and the government to task in a newspaper column for "inflating expectations" of both reserve replacement and the country's deep water prospects.
"This is about geological structures likely to contain hydrocarbons that Pemex has identified through seismic studies," Shields said, adding that the 54 billion barrel figure is "totally hypothetical."
Pemex also decided to stress the tentative nature of the find in a filing to the Mexican Stock Exchange, where the state company regularly issues debt.
"Although hydrocarbon reserves haven't been found, that is to say, no exploratory wells associated with the identified geological structures have been drilled, an important potential has been recognized," the company said.
Deep water deposits in the Gulf of Mexico have been growing in importance on the U.S. side, where they are now producing more than shallow water deposits.
The Minerals Management Service of the U.S. Department of the Interior said in a recent report that ultimate reserves in the deep water Gulf are approximately 71 billion barrels of oil equivalent, of which 56.4 billion are yet to be discovered.
Pemex's concern with moving into deep water comes as its biggest oilfield, Cantarell, faces a sharp decline in output, at an expected rate of 14 percent a year beginning in 2006, according to Ramirez.
Cantarell, located in shallow waters of the southern Gulf of Mexico, produces 2.2 million barrels a day of heavy crude oil, or nearly two thirds of Pemex's total output.