Oct
31
HOUSTON — Mexico’s energy tax structure largely is responsible for discouraging its national oil company from investing in complicated but potentially prolific fields, a company official said Thursday.
“Most of Pemex’s investments are made for tax reasons, not because of the business opportunities,” said Froyland Gracia Galicia, executive chief of staff to the director general for Petroleos Mexicanos.
Petroleos Mexicanos, or Pemex, has focused on shallow water plays, but has yet to extensively develop deep-water fields or in Northern Mexico plays because taxes make the investment less profitable.
Energy reform: Services companies stand to profit if Pemex makes changes
Gracia Galicia said Pemex plans to focus future investment in shallow-water, unconventional and deep-water plays in the Gulf of Mexico. But tax reform for the energy sector would help make many of these plays more profitable, he said.
“There are some fields that are very productive, and maintaining the production would make sense business wise,” Gracias Galicia said, explaining that Pemex sometimes is forced to close wells that require more investment in favor of others that can produce less expensively.
Mexico legislators will consider this fall a proposed constitutional amendment that would allow international companies to share in the risks and rewards of oil and gas investment in Mexico.
Under the current tax structure, shallow-water plays cost about $6 to $16 per barrel of oil to develop, while deep-water plays can cost $25 to $40 per barrel.
Gracias Galicia said lack of technology and expertise also prevents Pemex from developing some more complicated plays.
Comments
Leave a Reply
You must be logged in to post a comment.