Mexico's state-run oil and gas company Petroleos Mexicanos (Pemex) and Calgary-based Nexen Inc. plan to collaborate on research, training and oil and natural gas exploration and production -- with an emphasis on offshore deepwater and coalbed methane (CBM) projects.

Subsidiaries of Calgary-based Nexen and Pemex signed the agreement in Mexico City on Friday.

"This is an important step in furthering our relationship with Pemex and in helping to advance its resource development for the Mexican people," said Nexen CEO Charlie Fischer. "We are proud to be the first Canadian energy company to sign this type of agreement."

Nexen's Dwain Lingenfelter, vice president of Government Relations, was in Mexico City to sign the agreement on behalf of the company. He said it was "very gratifying to have worked with Pemex towards the conclusion of this important agreement that will benefit all parties." And Emilio Goicoechea, Mexico's Canadian ambassador, called the agreement "living proof " of Mexico's collaboration and partnership with the private sector.

The details of the new partnership are sketchy. Nexen does not have any publicly disclosed exploration and production (E&P) areas within Mexico. However, it has an extensive deep shelf and deepwater exploration o program offshore in the U.S. Gulf of Mexico; it was a successful high bidder on 30 offshore blocks with bids totaling more than $113 million net in the recent Minerals Management Service Central GOM lease sale (see related story). Nexen also has E&P operations onshore in Colombia, Mexico's neighbor. In Colombia, Nexen holds a 20% stake in the nonoperated Boqueron Block at Guando in the Upper Magdalena Basin in central Colombia, and it has interests in three other exploration blocks in the basin.

Several attempts have been made to reform Mexico's tightly held energy sector. The country is prohibited under its constitution from allowing foreign ownership of its energy reserves. However, Pemex four years ago instituted multiple service contracts, which allow private companies to contract for work within Mexico's nonassociated gas exploration (see NGI, July 21, 2003). The program, to date, has had limited success.

Despite its abundant oil and gas reserves, Mexico still has to import oil and gas because of a lack of infrastructure and growing energy needs. NOCs like Pemex, which is one of the top oil producers in the world, control about 77% of world oil reserves, and between now and 2030, 90% of new energy is projected to come from "transitioning" countries," according to the International Energy Agency (see NGI, May 7). The IEA said that increasingly, NOCs are setting their agendas independent of their home countries' governments and contracting directly with service companies to achieve their goals.

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