Shell, Total eye Mexico oil law changes keenly

Reuters: Shell, Total eye Mexico oil law changes keenly

Thu Apr 10, 2008 7:38am EDT
By Tom Bergin and Marie Maitre

LONDON, April 10 (Reuters) – European oil majors Royal Dutch Shell Plc (RDSa.L: Quote, Profile, Research) and Total SA (TOTF.PA: Quote, Profile, Research) said they were keenly watching proposed legal changes in Mexico that could pave the way for investment by foreign companies in oil production.

Shell’s head of exploration and production, Malcolm Brinded, said the fact the legal changes may not go so far as to allow foreign companies to book reserves would not be a deterrent, as Shell was more focussed on profit than reserves bookings.

“We’re always keen to see countries open up access. It will be exciting to see Mexico in that regard,” Brinded told reporters in a briefing at the sidelines of the International Oil Summit in Paris.

“We do think we can bring something to bear there,” he added, citing Shell’s experience in oil production in the U.S. Gulf of Mexico.

When asked whether Total was watching Mexico’s plan to reform the energy sector, Chief Executive Christophe de Margerie replied: “I look at any change in any producing country with interest.”

President Felipe Calderon’s government handed Congress a compromise energy reform plan on Tuesday that he hopes will attract foreign companies to hunt for new oil reserves to rescue falling output in the world’s No. 5 crude producer.

But energy sector analysts questioned whether the new contracts were attractive enough to entice investment.

Brinded would not comment on the terms of the proposed new investment framework but when asked if he would avoid investment in Mexico if, as analysts have predicted, legal changes precluded investors from booking reserves, Brinded replied “No”.

Mexico’s constitution bars private or foreign companies from exploring for or producing oil, and left-wingers and some centrists in the divided Congress are strongly opposed to allowing risk or profit-sharing partnerships.

The energy plan submitted this week was watered down to omit a controversial clause allowing state oil monopoly Pemex to form risk-sharing joint ventures, but it sets out a new system of service contracts based on incentive fees.

(Reporting by Tom Bergin; editing by Elaine Hardcastle)

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