UPDATE 1-Pemex head says Mexico will meet 3 mln bpd target
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HOUSTON, May 6 (Reuters) - Mexican oil production will average 3 million barrels per day at the end of 2008 as planned, the head of state oil company Pemex said on Tuesday.
Mexican oil production over the final eight months of the year was expected to make up for the first four months of the year when production problems occurred, Pemex chief Jesus Reyes Heroles said at the Offshore Technology Conference in Houston, Texas.
Reyes Heroles said a leak in a subsea pipeline in early April cut Pemex daily production by 83,000 bpd. However, the Pemex director general said he expects production to increase by 100,000 bpd as the year progresses, allowing the company to average between 3.0 and 3.1 billion bpd for the year.
To help Pemex offset declining production from the Cantarell field, Reyes Heroles said his company needs the flexibility allowed under President Felipe Calderon's energy reform proposal now being considered in Congress to pursue deep-water exploration prospects in the Gulf of Mexico.
"As President Calderon says, it is not the desirable reform, but it is the feasible reform, something we can pass now," he said.
The current proposal which does not require changing Mexico's constitution offers the best hope to give Pemex new operational and financial options in 50 years, he said.
Reyes Heroles said that while some Mexicans resist any move to allow foreign investment in Mexico's energy sector, "people understand better. There is more discussion," he said.
"I've never seen so close, a possibility of seeing something happen," Reyes Heroles said. "I'm not saying it will satisfy everyone in this room or me."
Reyes Heroles said Pemex is reviewing whether it will renew - at current volumes - its long-term contracts for Mayan crude, many of which will expire in the next year or so.
The review is not only being prompted by Pemex's forecast for declining crude production, but on its own oil needs as it attempts to upgrade and expand gasoline production at its own refining operations.
While U.S. refiners are "preferred customers, we are considering our strategy for this new stage," Reyes Heroles said.
(Reporting by Eileen O'Grady; Editing by David Gregorio)
