Mexico vies to become single largest oil supplier to US

Mar 28, 2002 01:00 AM

Mexico is increasing its importance as an exporter of oil to the US and is vying to become its single largest supplier as OPEC member countries cut back oil production. January statistics released by the US Commerce Department show that the nation imported 48.3 mm barrels of oil from Mexico, outpacing Saudi Arabia's 46.7 mm barrels and Venezuela, which sold 44.2 mm barrels.

Statistics from the US Energy Department, which do not include US territories such as Puerto Rico, show that Mexico shipped more oil than any other nation in the last three months of the year, but that Saudi Arabia regained a slight lead in January, followed by Canada and Mexico.
"Whether Mexico's number one or two, it's a strong statement in its timing and substance about its ability to be an ally in addressing North American energy issues," said George Baker, director of Mexico Energy Intelligence, a Houston-based consultancy. Mexico's proximity and steady supply has for years put it among the top four suppliers, which each export more than 1 mm bpd to the US. Mexico was in the second spot in 1997, 1999 and 2001, according to the US government's Energy Information Administration.

Because each company decides from which country to import its crude, Mexico's rise has to do with commercial decisions, not governmental ones, analysts say. Companies seem to be looking to Mexico to make up for the production cuts that both Saudi Arabia and Venezuela have made in line with OPEC rules to try to boost prices. Mexico's rise, however, also reflects the success of its national oil company, Petroleos Mexicanos, known as Pemex. The company has steadily increased production, from 2.9 mm bpd in 1999 to 3.1 mm barrels last year.
"Mexico never agreed to reduce production, only its exports, so they would take excess capacity and refine it or store it, making it much easier for them to switch where it's sent," said Sondra Scott, Latin America director for Cambridge Energy Research Associates.

While Mexicans debate the possibility of foreign investment in what is considered state patrimony, such an opening received the significant support of Lazaro Cardenas, grandson of the eponymous president who expropriated foreign oil installations in 1938.
"The defence of this fundamental pillar of national development and the recuperation of its social function don't imply cancelling the opportunity for private investment, national or foreign," said Mr Cardenas, governor of the state of Michoacan.

Source: The Financial Times
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