>>>Petrobras Announces Record Oil Production In Brazil<<<
Yeah, but PEMEX isn't doing so hot. Unlike Hugo howeverm Mexico is doing some business friendly things to incentivize production.
Does that Chuck Grassley ethanol freak from Iowa have the same kind of import ban on Brazilian crude that he has on Brazilian ethanol???
Per Financial Times:
Pemex approves incentive-based oil contracts
By Adam Thomson in Mexico City
Published: November 25 2010 23:03 | Last updated: November 25 2010 23:03
Pemex, Mexico’s state oil monopoly and one of the largest integrated oil companies in the world, has approved a new type of incentive-based contract that aims to boost production in maturing oil fields in the Gulf of Mexico.
The contracts, known as “integrated service contracts”, which will be awarded for three fields in the south of the country, will eventually be rolled out for deepwater fields where the majority of the country’s reserves are thought to lie.
Pemex said that the contracts will give third-party companies a fixed amount for each barrel of oil produced.
The contracts formed the backbone of a long-awaited reform in 2008 to the country’s restrictive energy policy, which prohibits Pemex from entering into risk-sharing contracts with third parties.
The reform was designed to boost the country’s oil production which has fallen dramatically in recent years from about 3.4m barrels a day in 2004 to less than 2.6m today.
The original reform proposal by the centre-right administration of President Felipe Calderón envisaged a bigger role for the private sector, for example by allowing companies to build and operate oil refineries.
However, opposition forces watered down that vision, leaving the incentive contracts as one of the few potentially significant changes left from the original changes.
Oil sovereignty remains a central tenet of Mexican national pride, and every year, adults and children alike celebrate the expropriation and subsequent nationalisation of the country’s oil industry, which took place in 1938.
Experts say that the new contracts appear to align more closely incentives for Pemex and for private companies, and also appear to introduce potentially greater flexibility into future contracts.
George Baker, who runs Energia.com, an oil-industry consultancy in Houston, said that the new regime would allow companies to innovate during the life of a contract. “Until now, every detail of a contract with Pemex had to be agreed beforehand and then strictly adhered to,” he said. “Now, a company has an incentive to innovate and bring in new technology during the life of the contract.”
However, Pemex also said that the oil itself would remain firmly in Mexican hands. “Under this new service scheme, the reserves and the production of hydrocarbons remain the exclusive property of Mexico,” it said.
That is likely to be a problem for private companies, which generally place great importance on sharing in the ownership of a field.
Investors may be further put off by the possibility of constitutional challenges that question the legality of the new contracts. As Mr Baker said, “This is the very beginning, but the beginning is a good place to start.”
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