Mexican president vows to keep oil industry in state hands

11:24, March 19, 2010      

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Mexican President Felipe Calderon on Thursday vowed to keep the country's oil industry a state monopoly while expressing satisfaction over the industry's "dramatically improving performance" in recent years.

He said that Petroleos Mexicanos (Pemex) now has its largest budget ever, 376 billion pesos (30.1 billion U.S. dollars), and that investment in physical infrastructure had risen to 263 billion pesos (21.0 billion dollars) from 85 billion pesos (6.8 billion dollars) 10 years ago.

"This investment has allowed us to start to stop and, we hope, soon to turn around, the fall in oil production that the nation has registered during recent years," Calderon told a ceremony marking the 72nd anniversary of the nation's oil expropriation.

Mexico had relied on Cantarell, a massive oil field discovered in the 1970s, for the bulk of it production. The field underwent a final decline five years ago and now produces only 30 percent of its 2004 peak.

"We are containing the decline of Cantarell and producing in new wells and deposits that have been discovered and put into production, thanks to new investment," Calderon said.

He added that Pemex now has a proven reserve replacement rate of 77 percent, up from 20 percent at the start of the decade. This remains below the industry standard of 100 percent, but is dramatically better, he argued.

"In fact, 77 percent is the highest rate since Pemex adopted the industry's best practices," the president said.

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