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Mexico Lied About Proven Oil Reserves, Report Says

From Reuters

Mexico, one of the world’s leading oil exporters, will have to import large amounts of crude within 10 years, according to a report that says the government has lied about the country’s proven reserves.

The report, in Monday’s edition of the weekly news magazine Proceso, quotes a former deputy director of the state oil company Petroleos Mexicanos, or Pemex, as saying that Mexico has lied about its oil reserves repeatedly since 1977 in a bid to shore up its financial position. It says the country’s reserves are less than half the official estimate.

The report, “The Lies of Pemex,” is based on an interview with Francisco Inguanzo, formerly Pemex’s No. 2 executive. Inguanzo said Pemex’s director commissioned him to conduct an independent study of Mexico’s proven reserves in 1988.

A Pemex spokeswoman said the report reflected the former official’s “very respectable” opinion but not the facts. She said she had read the report but declined further comment.

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Inguanzo told Proceso that the study, which took eight months, put Mexico’s reserves at 33.06 billion barrels, an amount he estimates has dwindled to less than 30 billion barrels in the past three years.

According to official estimates, Mexico’s proven reserves stood at 65.5 billion barrels last week.

Saudi Arabia, the world’s biggest oil exporter, has estimated reserves of 170 billion barrels.

Mexico exported 1.3 million barrels per day in 1991, but Inguanzo predicted that the country--faced with a surge in domestic demand--will be forced to start importing by 1998.

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Crude output, which the government says rose 5.2% to 2.68 million barrels per day during the first seven months of 1991, will begin to decline in 1993, Inguanzo said. By the year 2000, the country will be importing 266 million barrels of crude a year, he said.

He was quoted as saying that the discrepancy between his estimates and the official reserve figure was due, at least in part, to excessive optimism about the potential output of Mexico’s leading oil fields.

Inguanzo said he was commissioned to study Mexico’s reserves, using three hand-picked oil engineers, after a lunch with Pemex Director Francisco Rojas in December, 1987.

During the lunch, Inguanzo asked Rojas about the official level of Mexico’s proven oil and gas reserves. Proven reserves are those that can be recovered economically at today’s prices.

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The Pemex chief fell silent for about 30 seconds before Inguanzo let him off the hook by saying: “Forget about it sir. It was simple curiosity and, in any case, what you were going to tell me is a lie.”

Over-drilling has already caused loss of pressure in some fields, sapping their potential productivity, the report said.

It quotes Inguanzo as saying that Mexico’s proven reserve figures have been deliberately inflated since 1977 as the country boosted exports to earn sorely needed foreign exchange.

Opposition politicians have charged in the past that the government was failing to report accurately on Mexico’s reserves and over-exploiting the country’s limited supply of crude.

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Inguanzo is the first person associated with Pemex in a senior administrative position to make similar charges in public.

Inguanzo said he and a Mexican oil engineer identified as Francisco Alonso Gonzalez have drawn up a detailed report on Mexico’s oil reserves and sought to present it to President Carlos Salinas de Gortari since June.

According to Inguanzo, the request for a meeting with the president has gone unanswered.

A spokeswoman for Salinas said she was unable to confirm Inguanzo’s request for a meeting. She added, however, that it would be unusual for Salinas to discuss Mexico’s oil reserves or related issues with anyone other than the director of Pemex.

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