Baker report adds perspective to Mexico's energy reform, deepwater strategy

To understand the dynamics of Mexico's state oil company Pemex, it must be compared to international standards, George Baker, consultant and principal of Energia.com, said today at an OTC press conference.

Offshore staff

HOUSTON -- To understand the dynamics of Mexico's state oil company Pemex, it must be compared to international standards, George Baker, consultant and principal of Energia.com, said today at an OTC press conference. "Their methods of holding themselves to international standards are weak," he said.

Pemex's lack of attendance at international gatherings such as OTC, where ideas are shared, is one example, Baker said. He also pointed to the company's organizational structure, which he said is flawed, citing its lack of an easily identifiable exploration management team. "Pemex's exploration challenges are not a matter of technology, but a matter of the organizational structure of the company," he said.

Baker added, in response to Pemex's assertion that it has identified 17,000 target exploration wells, that the company relies too much on seismic, which has possibly put it in an unmanageable situation.

However, with the Cantarell field declining, Pemex hopes new deepwater production will help Mexico sustain about 3.3 MMbbl/d. It is estimated that over half of Mexico's potential petroleum resources (29.9 Bboe) are in deepwater, Baker said. Pemex has contracted five deepwater rigs.

But for Pemex to execute its strategy of developing deepwater resources, it will need to partner with other operators to share the cost of project development, which typically require significant capital expenditure, Baker said. He suggested that Mexico should enter into joint production agreements.

Baker also suggested that the US and Mexico should consider unitization agreements when a field's origin and destination on the US/Mexican border are in question. He cited Perdido (8 mi from the Mexican border) and Trident fields in the US Gulf of Mexico as examples.

George Baker is the author of a new report:Mexico's deepwater Gulf of Mexico: Potential and pitfalls. For the full report, visit www.pennenergy.com/index/mexico.html.

05/06/2009

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