Texas urges Mexico to get more practical in energy discussion

Jun 24, 2004 02:00 AM

Texas Gov. Rick Perry called on Mexico's politicians to "put aside emotional debate" on energy-industry reform and focus on the benefits that opening up the sector could bring the country.
"You've got to put aside the emotional debate and get down to the practical points of an energy discussion that could change Mexico forever," Perry said, addressing the American Chamber of Commerce and the Mexican Foreign Trade Council.

The Texas governor, who is visiting Mexico accompanied by executives from nearly 50 energy-related concerns, said Texan firms are ready to work alongside their Mexican counterparts in tapping the nation's resources.
Mexico is one of the world's top crude oil producers and boasts enormous oil and natural gas deposits. But its constitution authorizes the state alone to develop the nation's energy resources, a policy that has restricted investment in exploration, production and refining. Pemex, the state oil monopoly, generates close to 35 % of annual governmental revenues, as 60 % of its earnings are funnelled into the public coffers.

Perry met with Mexican President Vicente Fox to discuss potential exchanges between Texas and Mexico and the possibility that the latter may loosen up its energy policies so as to permit other nations to get involved. If legislative reform opens up the industry to private and foreign investment, Perry said, Mexico could become self-sufficient in energy.
Despite being an exporter of crude oil and one of the main suppliers of the US market, Mexico imports close to 25 % of the gasoline and diesel fuel it consumes, and 22 % of the gas, official figures reveal.

Mexico will require major investments in electrical energy within the next few years, since demand for same is expected to increase at least 6 % a year over the next decade, Perry noted. Some $ 60 bn will have to be spent upgrading infrastructure to keep up with that demand, he said.
Also, Perry signed memorandums of understanding with his counterparts in Coahuila, Tamaulipas and Nuevo Leon states -- all of which border Texas -- and said he hoped Chihuahua, which is about to hold elections, would soon join them. The memos provide for expanding growth opportunities in the border region.

Along those lines, Pemex, through so-called Multiple Service Contracts, has offered private companies a chance to exploit natural gas reserves in the Burgos region, albeit on highly restrictive terms.
Among US states, Texas is most vital to Mexico's interests, as 7 of the 11 gas pipelines that cross the border are located there -- the others being in California and Arizona -- and it serves as the gateway into the United States for Mexican products.

Mexico, Texas' principal trading partner, sends close to 90 % of its exports to the United States and imports from Texas some $ 1 bn worth of food products, machinery, new technology and other goods and services every year.

Source: EFE via COMTEX
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