Mexican Senate Ratifies Trans-Boundary Oil Deal with U.S. EFE
go to original April 13, 2012

Mexico's Senate. (EFE)

MEXICO CITY - Mexico's Senate on Thursday approved an agreement with the United States to jointly explore and develop oil and natural gas reserves straddling their maritime border in the Gulf of Mexico.

U.S. Secretary of State Hillary Clinton and Mexican Foreign Secretary Patricia Espinosa signed the agreement on Feb. 20 during a meeting of G20 foreign ministers in Los Cabos, Mexico.

The full Senate approved the accord by a vote of 69-21 with one abstention and it will take effect once published in the Official Gazette.

The Senate said the pact, which ended a moratorium on development of oil and gas reserves near the maritime border, is "a crucially important step so the country can access the hydrocarbons it will eventually share with its northern neighbor."

The agreement gives each country the right to a share of any reservoir that extends across the maritime boundary.

Although Article 27 of Mexico's constitution bans the granting of concessions or contracts to private firms for the development of Mexican oil reserves (seen by some observers as an obstacle to the oil-sharing deal), the charter also allows for state oil monopoly Pemex to develop trans-boundary deposits under the terms of treaties Mexico has ratified.

Some leftist lawmakers opposed the accord, citing a lack of clear rules to guarantee jurisdiction over the offshore resources and insufficient environmental protection guidelines.

For his part, Sen. Ruben Camarillo, of the governing rightist National Action Party, said the Mexico-U.S. deal contains "all possible elements to preserve Mexicans' patrimony" while also protecting the environment.

Sen. Francisco Labastida of the main opposition Institutional Revolutionary Party concurred, adding that the agreement "will be a tool to defend (Mexico's) interests" vis-a-vis the United States with respect to oil resources along the maritime border.

Mexico's oil output totaled almost 3.4 million barrels per day in 2004, but has since fallen due to a sharp decline in production at offshore Cantarell, formerly Mexico's most productive field, and a lack of investment.

The government, however, said last year that Pemex had succeeded in halting a steady annual decline in its reserves dating back to 1979.

A recent oil sector overhaul in Mexico gave the oil monopoly - created when the country's oil industry was nationalized in 1938 - more freedom to undertake projects with private firms, which are to be hired under incentive-based service contracts.

Experts say the domestic energy industry's future is in the deepwater Gulf of Mexico.

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