Mexican Oil Security an Issue for U.S. Too

An article posted this week by Energy Central''s Energy Pulse draws attention to unaddressed security problems facing Mexico''s oil industry. Oil revenues account for about a quarter of Mexico''s exports and 40 percent of the government''s income; since nationalization of the industry in 1938, management of Pemex''more or less the fifth largest petroleum company in the world''has always been an immensely sensitive issue. But it''s not just a local problem. Mexico is the world''s sixth largest exporter of oil and a major supplier to the United States. If there were a disruption in one of Pemex''s oil fields, the results would likely show up at U.S. gasoline pumps before appearing at Mexico''s own''where, by the way, prices aren''t posted, evidently because they hardly ever change.

For the last few years, output has been declining at Mexico''s immense offshore Cantarell field, which after Saudi Arabia''s Ghawar field is the world''s most productive. Daily national production is two thirds what it was four years ago. This implies, the Energy Pulse article points out, that the future production will have to shift to geographically more extensive onshore fields, which will be more vulnerable to attack by local insurgents or international terrorists. Yet the country has no coherent plan to protect the fields, and monitoring of the country''s airspace is notoriously leaky''a matter of longstanding complaint from the Yankees to the North, who have worried mainly about drug smuggling.

What to do? Closer cooperation with Mexico''s sometimes overbearing neighbor to the North could expose Mexico to greater threats from insurgents and terrorists and make its oil fields less rather than more secure. Yet it''s hard to see how Mexico would be able to secure its airspace and strengthen border controls without greater cooperation with the United States. So Mexican energy security policy will be a conundrum and a challenge not just for Mexico''s leaders but for the next U.S. president as well.

Last spring, when Mexican president Felipe Calderon sought to allow more private investment in the oil industry, he encountered sharp protests that emptied the country''s Congress. During a visit, I found the plaza in front of the Congress building eerily empty, and police warned me away. Graffiti asserted the sanctity of constitutional provisions that declare the country''s oil resources sacrosanct and prohibit foreign investment.

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