Officials at Mexico's state-owned oil monopoly said Monday that the company has detected massive new oil deposits in the Gulf of Mexico that could potentially double the country's reserves, but industry analysts cautioned that the company's findings are still unproven.
Officials at Petroleos Mexicanos, or Pemex, said that a three-year, deep-water exploration project found areas that could boost the country's total reserves to 102 billion barrels. Luis Ramirez, the company's head of exploration and production, told El Universal newspaper the find could "put us on a par with reserves levels of the big players like Iraq, United Arab Emirates, Kuwait or Iran."
Industry analysts cautioned that the figures were based on scientific estimates, not actual drilling. They said the findings, if proven, would be encouraging news in a country that produces about 3.3 million barrels of oil per day and is among the top three suppliers to the United States.
"No one has doubted that Mexico had tremendous potential, but until the drill bit goes out there, no one can go to the bank with this and comparisons with countries like Iraq are premature," said George Baker, director of Mexico Energy Intelligence, an industry newsletter based in Houston.
Joseph P. Riva, who previously studied U.S. offshore reserves for the National Academy of Sciences and wrote a book about world petroleum resources and reserves, said that the reserve estimates seemed inflated. He said Mexico would be "lucky" if it hit 20 billion barrels of crude equivalent, rather than the 54 billion Pemex officials are estimating in seven newly identified areas.
"I think this is blown up rather significantly," Riva said.
Political analysts questioned the timing of the news, coming two days before President Vicente Fox's annual state-of-the-nation address. They said Fox is in desperate need of good news to bolster his sagging presidency, and a major oil find could give him just that, as about a third of Mexico's annual revenue comes from Pemex.
A Pemex official, who spoke on condition of anonymity, said Monday that Fox had intended to announce the find in his Wednesday speech. Company officials declined to comment further until after Fox's speech.
Richard Nehring, president of NRG Associates in Colorado Springs, said that based on discoveries of oil in U.S. waters in the Gulf of Mexico, Mexico's discovery may be "very significant" but its size has probably been exaggerated.
"The amounts are too large," said Nehring, whose company studies North American oil and gas fields. "They may have exaggerated it for political purposes."
"We've been through this before," said Carlos Heredia, a Mexican political analyst and economist, recalling a similar announcement by President Jose Lopez Portillo in the late 1970s. Lopez Portillo announced a major oil find in Mexican territory and told Mexicans to get ready to "administer the abundance." His promised oil boom never materialized, and his presidency is now remembered best for economic mismanagement and paralysis.
Analysts said that extracting the oil from below the sea bottom would be mainly a political challenge for Mexico. Baker said Pemex does not have the technological expertise or budget to begin the multibillion-dollar process of extracting oil from the deep-sea bottom. He said Pemex is equipped to drill in a maximum of 180 feet of water, while the world's largest companies can drill in ocean water thousands of feet deep.
Baker said Mexico needs to change its laws to allow Pemex to conduct joint ventures with more experienced foreign partners. Since Fox's election in 2000, he has pressed for reforms to Mexico's energy sector to allow greater private participation to help modernize Mexico's oil and electricity industries. But Fox has been unable to pass those reforms in the opposition-dominated Congress, which analysts here describe as one of the major failures of his administration.
Ramirez told El Universal that Pemex could not extract the new-found oil deposits without reform of Mexico's energy laws.
"Mexico needs to establish a technology alliance with countries that have experience," he said.
Blum reported from Washington.