February 20, 2012 / 5:36 PM / 8 years ago

Mexico, US sign cross-border oil deal for deep water

LOS CABOS, Mexico, Feb 20 (Reuters) - Mexico and the
United States signed an agreement on Monday to help U.S. firms
and Mexican oil monopoly Pemex exploit deep water oil resources
in the Gulf of Mexico that straddle the countries' maritime
    The deal, negotiated last year, will lift the moratorium on
oil exploration and production in the western gap portion of the
Gulf and sets up legal guidelines for companies to jointly
develop any trans-boundary reservoirs.	
    "These reservoirs could hold considerable reserves ... but
they don't necessarily stop neatly at our maritime boundary.
This could lead to disputes," U.S. Secretary of State Hillary
Clinton said at a ministerial meeting of Group of 20 nations in
Los Cabos Mexico. "The agreement we are signing today will help
prevent such disputes."   	
    Mexico - the world's No. 7 oil producer - is far behind the
United States in exploring for deep water oil reserves and has
drilled less than 20 wells in its territorial waters in the
Gulf. Pemex estimates there are more than 29 billion barrels of
crude equivalent in the area, or 58 percent of the country's
prospective resources.	
    Carlos Morales, Pemex's director of exploration and
production, told Reuters in an interview on Monday that the
company plans to drill six or seven new deep water wells this
year and has a plan for eight annually over the next five years.	
    So far most of the discoveries in Mexico's deep waters have
been natural gas.	
    Mexico's oil industry regulator worries Pemex does not have
the capability or the safeguards in place to move into
ultra-deep drilling. 	
    Safety concerns loom large after the explosion on BP's
 Deepwater Horizon rig in April 2010 that killed 11
workers and spewed more than 4 million barrels of oil into the
    Mexico is hoping to attract help from private companies to
explore for oil in the region with a 2008 oil reform that allows
for incentive based operating contracts, but no projects have
yet been announced	
    "This agreement also creates new opportunities for our
businesses.  American energy companies will be able - for the
first time - to collaborate with Pemex, their Mexican
counterpart," said Clinton.  	
    The country, which relies on oil revenues to fund a third of
the federal budget, closely guards its oil resources
nationalized since 1938.	
    "This agreement was negotiated invariably under the
principle of respecting sovereign rights. Mexican oil wealth is
and will continue to be of the Mexicans," President Felipe
Calderon said at the event.
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