MEXICO: TOMMORROW'S NO. 1 OIL POWER?
Mexico City — Move aside, Saudi Arabia; here comes Mexico. That is Mexico's message as its oil and natural gas reserves mount almost monthly toward the point where Mexico may rival and perhaps even surpass Saudi Arabia in total reserves.
"We are sitting astride a sea of oil" is how Jorge Diaz Serrano, director general of Petroleos Mexicanos (Pemex), the state oil enterprise, puts it.
Although there is an obvious mood of optimism here about the country's oil reserves, Mexicans realize they still have a way to go before exploration confirms that their reserves are comparable to the Saudi's. After all, Saudi Arabia has 150 billion barrels of proven reserves and Mexico a mere 50 billion.
But 50 billion barrels still puts Mexico in the major leagues of world oil powers.
"We no longer have to import oil," Mr. Diaz Serrano notes.
That alone is important here. But Mexico is becoming a major oil exporter -- even though it is keeping production at a level that will permit its present proven reserves to least 50 years.
As proven reserves keep rising, an increase in production may well ensue. Nations far and wide are courting Mexico, seeking some of the country's newfound "black gold."
Pemex says that in addition to the 50 billion barrels of proven reserves, it has another 50 billion in probable reserves and 250 billion barrels of possible reserves. Some of these probable and posible reserves are likely to prove readily available as more studies are made and petroleum technology improves.
Any way you slice it, this is a heady report -- especially since that reserve total is based on exploration of only about 12 percent of Mexico's total land and sea area. Saudi totals are based on exploration of almost all of its desert region.
"We have a long way to go before we know just how much oil we have," Mr. Diaz Serrano comments. "But there is no doubt that we are becoming a major oil producer."
There is also no doubt that the steadily increasing size of Mexico's oil reserves has m ade the country a major factor in the world market in just five years. Today it is the world's sixth-largest producer of petroleum and has the fourth-largest proven reserves.
This is all new for Mexico.It was only in 1975 that the current wave of oil enthusiasm began here, as geologists working the old Reforma field in Tabasco suddenly discovered vast quantities of high-grade petroleum at depths never before explored. The Reforma field was then playing out, as was much of the rest of Mexico's oil.
Until the Reforma finds were announced, Mexico Appeared to have a very limited energy future. Although it had been the world's second-largest producer of petroleum in the 1920s, after the United States, Mexico's oil industry had clearly fallen on bad times.
But the picture has been turned around completely since then. After the Reforma discoveries, dozens of other finds along the eastern coast of Mexico were made -- from the city of Tampico south to the Yucatan Peninsula and also in Caribbean waters of the Bay of Campeche.
The future now looks extremely bright. The only uncertainty is just how much oil will eventually be discovered.
"What a prospect!" exclaimed the Mexico City newspaper Excelsior. "It is all very tantalizing."
For the energy-short United States, just next door, this bonanza is indeed tantalizing, even mouthwatering. Yet it is highly unlikely that the US stands benefit very much from Mexico's new oil. The reasons are many, but center for now on what the Mexicans regard as the Carter administration's basic lack of interest in its southern neighbor.
"The Carter administration has shown itself particularly adept at alienating us," says Rodrigo Montero Silva, a leading Mexico City political commentator. "From what we thought would be an era of improving relations, as Jimmy Carter invited President [Jose] Lopez Portillo to Washington [in February 1977], everything has gone downhill, and the blame lies not with us but with Washington.
"It almost seems as if the Carter administration has a death wish: to alienate Mexico."
Many Mexicans, taking off on that theme, would say "good riddance." They think back over nearly 160 years of troubled relations between the two nations, in which the larger US often got the better of its less-developed southern neighbor.
"Nada mas!" ("Never Again!"), proclaimed Guadalajara's Ocho Columnas in commenting on what it perceived as US victories in dealings with Mexico. "The time has come to say never again to Uncle Sam. Isn't it time that the United States got the message that it cannot push its way around."
The Lopez Portillo government appears to take a similar line. After a brief flurry of good words when Jimmy Carter went to the White House, President Lopez Portillo has shown no inclination to give Washington any special treatment.
Complaining that the US has dragged its heels on resolving a number of bilateral issues -- from trade to water, from illegal immigrants to drugs, from natural-gas pricing to the sale of tomatoes -- the present government here has moved sharply away from the US in recent months.
Courted from near and far by foreign businessmen, government trade officials, and world leaders, Mexicans are basking in their newfound importance. Hotels here that once bulged with US tourists are now full of European, Japanese, South American, and other businessmen. Money is flowing into the Mexican Treasury as investments by many of these foreigners get under way.
It is, indeed, a heady experience for Mexico and the Mexican.
But some Mexicans worry about the way oil is changing their country. Carlos Fuentes, Mexico's leading novelist, comments: "Mexico is a nation, not an oil well."
President Lopez Portillo says he is aware of the danger that the "current oil fever" will overshadow everything else in Mexico and that the country's future "could be mortgaged to an oil well." In this connection, his administration is carefully curtailing oil production, and he appears determined during the remaining three years of his term to keep Mexico, as Pemex's Mr. Diaz Serrano puts it, From "going on an oil craze."
Moreover, there is considerable concern in some government sectors that oil will appear to some Mexicans as a panacea to solve the persistent social and economic problems that are a virtual powder keg for Mexican governments. "It will help," Mr. Lopez Portillo admits, "but it is not the final answer" to the country's social and economic problems.
Those problems center on this statistic: Half of Mexico's 72 million people are under the age of 15. The question is how to feed, clothe, house, educate, and find jobs for this legion of young people.
In concrete terms, food, clothing, and housing are inadequate for some 30 million Mexicans. Ten million school-age children are not getting an education because there are not enough classrooms and teachers. And while 2 million people come on the job market each year, only half a million new jobs are created yearly in a country where unemployment is running at 20 percent and underemployment is equally high. This problem lies behind the heavy flow of Mexicans into the US looking for jobs and opportunity.
President Lopez Portillo knows this story full well. "Future generations will hold us accountable for how we deal with the issues of livelihood for the many poor people in our country," he says.
Oil, of course, is extremely important in helping solve the problems. It is bringing in $20 billion yearly in disposable income. The President stresses, however, that in and of itself oil will not solve the problems. "We must have a coordinated program," he says.
Already the oil wealth is helping to finance a huge expansion of the country's industry. The government reasons that the growth of basic industries at the expense of stimulating socially valuable, but inefficient, labor-intensive jobs will bring on a development boom that will mean more job opportunities over the long haul. Not everyone agrees, though, that the government has its priorities right.
"Unemployment is therefore likely to remain a chronic problem until the end of the century," comments Uno Mas Uno, a morning tabloid here that takes a rather dim view of the whole process. "Not until Mexico really tackles its basic human problems will we be develop," the paper adds.
Many Mexicans agree, but for now, because the Lopez Portillo government has so decreed, the oil bonanza is going to be used for big industrial development, with the hope that this will be sufficient to begin the process of creating the jobs Mexico needs.
"It is a gamble," says Hector Solis Reynosa, a member of the Ministry of Commerce and Industry team. "but it seems the right gamble. If we can create a true industrialization that builds jobs, thus holding the line until the population surge slows, we will be successful."
With population growth running at 3 percent a year, however, and despite strong government efforts to slow the trend, it really is just a gamble.
Moreover, in the view of most Mexico experts, there is little likelihood that the serious lag in education and the huge deficit in employment will find solutions until this population growth is curbed.
Despite its oil, then, Mexico seems unlikely to lift itself anytime soon out of its staggering economic and social problems -- a fact that will affect not only Mexico but also its northern neighbor, the United States.
Yet Mexico remains a nation of great riches and, appropriately, one that in geographic shape resembles a cornucopia, or horn of plenty.
When and if the Mexican people eventually enjoy the fruits of that cornucopia remains the unanswered question -- the grate dilemma facing Mexico and its leaders today.
Oil is clearly a very uncertain bonanza.