CAPITAL: MEXICO CITY
MONETARY UNIT: PESO
REFINING CAPACITY: 1,525,000 B/CD
OIL PRODUCTION: 3.1 MILLION B/D
OIL RESERVES: 28.3 BILLION BBL
GAS RESERVES: 30.4 TCF

Mexico ended 2000 with a new president and new plans for gas exploration and development, deepwater drilling, petrochemical plants, and other economic initiatives.

The center-right National Action Party (PAN) swept to power with the July 2 election of Vicente Fox as president and control of both houses of Congress, directly or indirectly.

Fox took office Dec. 2 for a 6-year term and planned a businesslike approach to government.

Privatization of Pemex, the country's largest nongovernment employer and largest source of government revenue, was prohibited by the constitution. But Fox reportedly wanted Pemex to be operated less like a state monopoly and more like a competitive international oil company.

On PAN's agenda was to encourage foreign investments to expand the electricity, refining, and petrochemicals industries.

Observers said Fox would need much more detailed information than had been received in the past from Pemex and other operating entities. Fox appointed Eduardo Martens as energy minister and Raul Munoz to head Pemex.

As 2001 began the government and private industrial customers reached agreement on a plan under which buyers of Mexican gas, at their discretion, could select a flat price of $4/MMbtu for 3 years. The customer could select the fixed price or continue buying spot gas—either from Pemex or by importing it from the US via open-access pipelines.

Upstream developments

With oil and gas prices high in 2000, Mexico publicized grand plans for upstream activity.

This came scarcely a year after Mexico in April 1999 declared that it was reducing its proved oil reserves to 24.7 billion bbl from 45 billion bbl, effective Jan. 1, 1999, and its proved gas reserves to 45 tcf.

Pemex in late 2000 launched a vast Strategic Gas Program (PEG in its Spanish acronym) that consisted of 20 specific projects selected from Pemex's existing investment portfolio.

Meeting gas demand was at the center of many of the projects. Pemex said Mexico's gas demand would grow as much as 9%/year through 2010 after growing 4.4%/year in 1995-99.

Pemex estimated proved, probable, and possible gas volumes at 81 tcf, 79% of it associated. It said yearend 2000 production was 3.466 bcfd of associated gas and 1.357 bcfd of nonassociated gas.

To meet rising gas demand without creating an oil oversupply and without boosting oil exports, officials moved to develop nonassociated gas resources.

Pemex had approved rehabilitation of fields and exploration in the Macuspana basin, where it hoped to boost production to 600 MMcfd from 100 MMcfd.

PEG also called for elimination of gas venting from Bay of Campeche fields.

Burgos basin output of 1.2 bcfd was to rise to 1.4 bcfd by 2004, Pemex said.

Late in the year Fox said he would favor opening Burgos to private exploration and production investment in nonassociated gas, and a Pemex official said this might be done through service contracts.

Cantarell, Mexico's largest oil producing complex, was expected to produce 1.47 million b/d of heavy crude and 555 MMcfd of associated gas during the year. This was to rise by 2002 to 2.22 million b/d and 875 MMcfd.

Pemex said it planned to drill five deepwater exploratory wells in the Gulf of Mexico during 7-10 years. The company said it had completed only 20 wells in 100 m of water or more.

Mexico and the US reached an agreement in mid-2000 that gave Mexico 62% and the US 38% of the "western gap," a 17,190 sq km part of the deepwater gulf that fell beyond the agreed maritime boundary.