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Pemex Says New Deepwater Well Could Hold 10 Billion Boe

Petroleos Mexicanos (Pemex), Mexico's state-owned oil company, has begun drilling a deepwater exploration well in the Gulf of Mexico in a field that could hold up to 10 billion boe. The Noxal exploration well, located offshore Veracruz in 3,000 feet of water and 13,000 feet underground, could rival Mexico's Cantarell field, which now accounts for about 60% of the country's output, Pemex CEO Luis Ramirez said.

Pemex began drilling the Noxal well in December, and it said preliminary results indicate "reserves exceed those of Cantarell."

"This confirms the strategic vision that future oil production in Mexico will be in deep water," Ramirez said in a speech on Tuesday. However, he said ramping up oil and natural gas output from the field could take up to 10 years. If estimated potential reserves are accurate, the new field could help to overcome a decline from Cantarell.

As of Jan. 1, Pemex had proven, probable and possible reserves of 46.42 billion boe, about 500 million boe less than Pemex reserves totaled a year earlier. Cantarell production is expected to decline 6% this year to 1.9 million boe/d and decline more in subsequent years.

To ensure Pemex is able to find new reserves, Ramirez said it would "be indispensable to have more administrative autonomy and modern corporate governance, including the ability to carry out strategic alliances, to face these important challenges."

Mexican President Vicente Fox, who has long pushed for allowing foreign investment in the country's energy industry, said in an interview with Dow Jones Newswires that the country has been investing $5 billion a year in oil and gas exploration, "and that...is now bearing fruit."

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