The imbalance between natural gas production and gas consumption in Mexico “has already arrived at critical levels,” according to Raul Munoz, CEO of Petroleos Mexicanos (Pemex). Munoz, as point man for President Vicente Fox’s administration, is working to convince opponents that private investment is the best answer to ensuring Mexico’s energy future.

Despite strong protests within Mexico’s congressional members — who outnumber Fox’s supporters — Pemex on Tuesday finally posted terms and other information on its web site (www.pemex.gob.mx) about the proposed multiple service contracts (MSCs), which offer specific details on how to make a bid to invest privately in the country’s exploration sector.

Moving more slowly because of the battered economy and a drop in popularity for Fox’s administration, Pemex said it expects to award the first MSCs in September, worth about $8 billion in development contracts to private companies. The 10- to 20-year contracts would be awarded for production of non-associated natural gas from the Burgos field in northeastern Mexico.

Pemex, which devised the contracts to supposedly remain within the limits of Mexico’s constitution, said the MSCs would produce nearly 1 Bcf/d by 2006 — providing about 16% of the country’s projected demand. However, opponents of the plan, members of the Institutional Revolutionary Party, or PRI, said they will seek ways to block the auction. PRI controls the most seats in the legislature. In the meantime, Munoz and other members of Fox’s administration will be lobbying members of Congress to support the landmark contracts.

“”What was a forecast is now a reality,” said Munoz. “The future got ahead of us.”

Pemex estimates that natural gas demand will rise more than 20% this year over 2002, to about 5.2 Bcf/d. According to the Energy Ministry, Mexico’s natural gas demand had been expected to grow at a rate of more than 7% a year, while power demand was projected to grow about 12% annually. However, for the past 11 years, Mexico has added only 800 MMcf/d to production.

Pemex currently produces about 4 Bcf/d, according to Munoz. He noted that Pemex lacks the expertise, financing and technology to improve the country’s natural gas needs. Pemex controls all oil and gas production and oil refining in the country. However, natural gas transmission, distribution and storage have been open to private investment since 1995.

Since 1938, when Mexico seized the assets of British and U.S. oil and gas companies, the country has prevented outside participation in almost every aspect of its oil and gas industry. The seizure had followed a 1917 amendment which bars Pemex from offering outside investors any revenues on oil and gas production. Mexico is estimated to be the fourth largest holder of oil and gas reserves in the world; it is the only one of five top oil producers where international companies may not operate.

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