Perils of a petropower

There was a time when a new oil discovery in Mexico was sure to bring smiles to the faces of Mexican officials. But President Jose Lopez Portillo's latest disclosures of substantially increased Mexican oil reserves, based on new finds in the Bay of Campeche, evoked much less enthusiasm this month than similar announcements have done in the past.

Mexico is finding that being a world petropower is not all that it is cracked up to be.

The latest finds boost Mexico's proven reserves to 72 billion barrels, up more than 4 billion barrels from the total announced only last March. Unofficla estimates, however, go further -- suggesting the proven-reserves tally may be in the neighborhood of 90 billion barrels.

With this year's world oil glut showing few signs of abating, the Lopez Portillo government is scrambling with only limited success to keep oil sales at levels assuring enough foreign exchange to fuel Mexico's ambitious development projects.

But demand for Mexican oil remains sluggish. Numerous United States and European oil companies have cut back on their purchases of Mexican oil due to world market oversupply and to uncertainties this summer over Mexican oil prices.

Two developments in the past month, however, have taken some of the sting out of declining scales. The Japanese have increased their purchases of Mexican oil and the US government has signed a five-year contract for nearly 110 million barrels of oil.

This US purchase represents a major change in US policy and provides a boost for US-Mexican relations. Moreover, there are hints that the US government may purchase more Mexican oil. It is the first time that Washington has ever purchased oil directly from another government. As such, it is a clear signal to President Lopez Portillo that the Reagan administration wants to do what it can to ease Mexico's current oil-sale problems.

There is concern in Washington that MExico, ever more dependent on oil income to finance its development, simply does not have the flexiblity to handle the current decline in this income on top of soaring interest rates and high inflation.

It is estimated that Mexico probably will earn about $5 billion less this year than anticipated because of the vagaries in the world oil market. Even if the falloff eventually proves to be only half that amount, this would be a severe blow to the MExico economy.

Petroleos Mexicanos (PEMEX), the state oil enterprise, already has had to borrow substantial sums on the world market to make up for declining revenues and shortfalls in cash flow resulting from the decline in oil sales this summer. The US government's purchases will not keep PEMEX from having to borrow, but it does ease the crunch.

At the same time, the 110-million-barrel purchase will be used to build up the US strategic petroleum reserve. This reserve, much discussed during the Carter administration, currently has only a fraction of its projected 750 million barrels.

Mexico's new oil finds, which President Lopez Portillo disclosed in his annual state-of-the-nation address Sept. 1, are largely off-shore discoveries in the Bay of Campeche, northeast of the major oilfields in the states of Chiapas and Tabasco. But PEMEX spokesmen say that some of the oil is also in those fields.

The offshore discoveries are out in the middle of the gulf, where the runaway oil well IXTOC I spilled millions of barrels of oil into open waters and kept Mexican and US oil specialists busy for six months last year before they were finally able to cap it.

PEMEX officials refused to break down the new discoveries between oil and natural gas, but it is assumed that they probably are in much the same two-thirds oil, one-third natural gas ratio as the rest of Mexico's petroleum reserves.

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