World beats a path to Mexico
Mexico is moving out of the bush leagues of world oil producers and into the majors -- and suddenly it is being courted as if it were a star pitcher or hitter.
Hotels here are overflowing with foreign trade missions offering technology and knowhow for Mexico's development needs, but with an eager eye on some of the oil.
It is all a rather heady experience for Mexico and Mexicans. They are, however, getting used to it -- and "liking it very much," as an official in the Ministry of Foreign Trade admitted recently.
Behind this new experience is, of course, oil, which Mexico has in such abundance that it can now play an increasing role in the world economy.
"Mexico is now truly a petroleum power," says Jorge Diaz Serrano, the director general of Petroleos Mexicanos, the state oil company more generally known as PEMEX.
The dimension of Mexico's oil potential is becoming abundantly clear:
* Proven reserves here now total 50 billion barrels, thanks to discovery of vast quantities of oil and natural gas in the past six years. This means Mexico is in sixth place among holders of the world's large oil reserves, which puts it on a par with Iran and Kuwait.
* Production has more than doubled within four years -- from 929,000 barrels in 1976 to an average of 1.9 million in 1979. In 1980 the production forecast is 2.7 million by the end of the year.
For a time, there was an inclination on the part of some oil people in the United States to play down the Mexican oil finds and to argue that the Mexicans were inflating their figures.
Although some still feel this way, many foreign oil people here suggest that PEMEX may now be the one that is downplaying its finds. Proven reserves may be substantially higher than Mr. Diaz Serrano announced in mid-March when he set the 50 billion tally, some foreign experts say.
Although the proven reserves represent the amount of petroleum Mexico says is definitely there for the taking by known techniques of extraction, Mexico claims it has almost 50 billion barrels more in probable reserves and 200 billion in potential reserves.
This assertion, accepted by responsible oil specialists, is based on surveys covering a mere 10 percent of Mexico's land and sea area.
There are numerous oil geologists, both Mexican and foreign, who think Mexico's reserves in the ground and under the ocean floor actually are much higher -- so high that they could rival Saudi Arabia's known reserves. Saudi Arabia has both the highest-known present resources in the world and the highest production of any single nation.
But if PEMEX feels this could be the case, it is not saying.
High officials in PEMEX, when asked about this possibility, will only smile. One says, "Time will tell."
Whatever Mexico's total reserves eventually prove to be, it has enough oil and natural gas now to attract a wide variety of other countries eager to purchase the Mexican black gold.
Production in mid-1980 -- more than 2 million barrels a day -- is great enough that roughly half can go into the export market. At the start of 1980, about 700,000 barrels a day were exported. Now production is close to 850,000 barrels, with about 75 percent going to the United States.
(The US total includes some natural gas, shipped under the recent Mexican-US agreement at prices substantially favorable to Mexico.)
Spain and Israel are the only other major recipients of Mexican oil. But PEMEX, along with Mexican President Jose Lopez Portillo, would like a more diverse group of customers.
In recent months, PEMEX has begun shipments to other countries, including Brazil, Costa Rica, France, Japan, Nicaragua, and Yugoslavia. Canada will soon join the list.
The Japanese are particularly interest in Mexican oil. Even before their recent decision to stop Iranian oil purchases, Japanese trade missions here were offering a variety of petroleum and other development technology to the Mexicans. The Japanese are hoping to get about 300,000 barrels daily from Mexico by 1981.
In return, Mexico has suggested that Japan boost its investment here in the next year or so -- perhaps to the tune of more than $1 billion. Current private Japanese investment in Mexico is about $200 million.
A French businessman who has just concluded a $25 million deal in petrochemicals commented: "The Mexicans act as if they can call all the shots in these deals. And in a way, I have to agree with them. They have the oil we need."
A US businessman added: "The Mexicans are laughing all the way to the bank."
That may be true, but as yet little of the money is jingling in the pockets of the average Mexican. The population of this big Central American nation increases about 3 percent a year. Fully half of Mexico's approximately 70 million people are poor, and they have yet to benefit from the oil bonanza.
Part of the reason is that PEMEX is spending the billions it earns from oil and natural gas sales on costly imports of equipment and material used in the oil production boom. Not until late 1980 will surplus oil income begin to affect the general economy.
Meanwhile, Mexico is doubling its refining capacity and tripling its petrochemical production -- all in the space of three years.
Oil and natural gas production are rising somewhat, but not fast enough to satisfy all potential purchasers. The modest production targets set by President Lopez Portillo three years ago have already been eclipsed, and production is rising faster than he originally promised.
All this takes place against the scene of PEMEX finding new oil and natural gas reserves. In addition to the older and established fields along the east coast (Reynosa, Panuco, Poza Rica, Faja de Oro, Angostura, Istmo, Tabasco, and Reforma), PEMEX has located four other new fields along the coast and in the waters of the Gulf of Mexico -- Laguna Madre, Chicontepec, Bejuco La Laja, and a field in the Bay of Campeche.
Reforma alone produces 65 percent of Mexico's current output, while Chicontepec and the Bay of Campeche fields are thought to be potential rivals of Reforma -- perhaps by 1982, if not sooner.
PEMEX has also found three fields along the west coast -- one at Mazatlan, another off San Blas, and a third, Prospecto Isabel, north of Acapulco. These latter are largely offshore fields, with the San Blas site showing evidence mainly of natural gas.
Oil from these new fields on both coasts is not included in the 50 million barrels of proven Mexican reserves.