Pemex makes deep-water oil discovery
MEXICO CITY --Mexican state oil monopoly Petroleos Mexicanos, or Pemex, said it made its first deep-water oil discovery this month, uncovering a deposit that could contain more than 200 million barrels of crude oil equivalent.
The Nab deposit in the Campeche Sound, Pemex's main oil-producing zone, contains a very heavy crude with an API gravity of 9, according to a Pemex document.
Pemex contracted Diamond Offshore Drilling (DO) to drill the well at a depth of 681 meters (2,230 feet), which produced an initial flow of 1,200 barrels a day.
Pemex estimated that original volume in the deposit could exceed 200 million barrels of crude equivalent, and it said proven, probable and possible reserves are in the process of being evaluated.
The find indicates the potential of the heavy crude region and increases the likelihood of success in the zone, the company said.
Pemex has seen its reserves decline in recent years, and company officials say that they need to form alliances with foreign oil companies to tackle potential in deep waters of the Gulf of Mexico.
The question of joint ventures is a touchy one in Mexico, where the oil industry was nationalized in 1938. While Pemex has a refining joint-venture in Texas with Royal Dutch/Shell and a stake in Spanish oil company Repsol-YPF, only Pemex can produce and refine oil on Mexican turf.
Mexico's proven reserves stood at 18.9 billion barrels of crude oil equivalent at the end of 2003.
Pemex's concern with moving into deep water comes as its biggest oil field, Cantarell, faces a sharp decline in output. Production at Cantarell is about 2.2 million barrels a day of Pemex's total 3.4 million barrel-per-day output.
But the giant deposit is expected to start declining 14 percent a year starting in 2006, according to Pemex's most recent estimate.
Heavy crudes, which account for nearly three-fourths of Pemex's production, fetch lower prices in the market because they're more difficult to refine and naturally yield less gasoline than light crudes.
------
Eds: Anthony Harrup is a correspondent of Dow Jones Newswires. 