(Bloomberg) -- Mexico’s Finance Minister Arturo Herrera said the country should debate how to exploit its deep-water hydrocarbon riches, in an apparent challenge to President Andres Manuel Lopez Obrador’s decision to suspend private oil auctions to explore these deposits.
“We need to have a profound discussion about what we are going to do with deep water, because in deep water, technology is needed that we probably don’t have and there’s a risk level that I’m not sure Pemex should run,” Herrera said during a testimony before the Senate in Mexico City.
The minister added that those fields take seven years to explore, three years to develop and then produce for 20 or 30 years, meaning that their benefits would only materialize in the long term. These discoveries would have an impact for Mexico in years to come, Herrera said.
“It would be very important for the country, and that’s the discussion we need to have,” he said.
Read More: Mexico’s Pemex Scramble: Doing Just Enough to Placate Raters
After taking office in December, Lopez Obrador halted oil auctions begun by the previous administration of Enrique Pena Nieto arguing that opening the energy industry to private drillers didn’t result in an increase in oil output. The president has said many times that he’d only restart those auctions, where oil companies get rights to explore deposits in the deep waters of the Gulf of Mexico, once he sees the firms that have already won permits produce a significant amount of crude.
Herrera’s comments on Thursday seem to be explaining why those blocks aren’t yet producing as much as the President is expecting, while also signaling the long-term benefits of such exploration that Mexico is limited in carrying out itself.
Pemex’s oil production has declined every year since 2004 and is now half of what it once was at 1.68 million barrels of oil a day.
--With assistance from Amy Stillman.
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