IEA and French minister turn up heat on Mexico over oil capacity

Apr 21, 2005 02:00 AM

The head of the International Energy Agency and the French industry minister turned up the heat on Mexico by calling on it to boost its oil production by opening up to foreign investment.
They made the call amid fears that wafer-thin spare global crude capacity puts oil-thirsty nations at the mercy of a supply disruption as well as contributing to surging energy prices that could derail world economic growth.

"Mexico should open up," Claude Mandil, executive director of the agency said. "That would help the world get part of the oil it needs and Mexico retrieve more revenue from exports," he said on the sidelines of an international energy summit in Paris.
The IEA, which represents the energy security interests on behalf of the Organization of Economic Cooperation and Development, has invited Mexico to discuss the issue at the IEA's biannual ministerial meeting, Mandil said.

Mexico is among the top three exporters of crude to the US, according to the US Department of Energy. In February it shipped 1.45 mm bpd.
On boosting capacity, "some countries are making efforts but some, like Mexico, don't," said French Industry Minister Patrick Devedjian on the sidelines of the same conference.
In contrast, Devedjian praised Saudi Arabia: "They're calling for more stable oil prices and they make efforts to increase production capacity."

Mexico, which seized private oil assets 67 years ago, may need foreign companies' capital and technology to boost its oil output. State oil monopoly Petroleos Mexicanos hands over more than 60 % of its annual revenue to the government in taxes and royalties, limiting its investment possibilities.
Last year, despite record crude oil production, this fiscal burden translated into a net loss of $ 1.3 bn on record sales of $ 69.1 bn.

The administration of Mexican President Vicente Fox is seeking legislative approval for legal changes that would allow Pemex to form alliances with private companies in order to exploit reserves in deep waters off theGulf of Mexico, for which it lacks the technology and know-how.
But the government has failed so far to win support from the country's two main opposition political parties ahead of the 2006 presidential elections.

Source: Dow Jones
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