Chevron First Major Oil Producer Seeking Pemex Partnerships

May 12, 2014 4:05 pm ET

(Updates with Mexican oil reserves in fifth paragraph, further comment from Chevron’s Moshiri in eighth paragraph.)

May 12 (Bloomberg) -- Chevron Corp., the world’s third- largest energy company by market value, became the first major international oil producer to reveal partnership plans with state-run Petroleos Mexicanos since Mexico signed landmark legislation to reopen its doors to foreign producers.

Chevron, which operates several rigs on the U.S. side of the Gulf of Mexico, is in talks with Mexico City-based Pemex for exploration opportunities in deepwater, shallow water or shale, Ali Moshiri, Chevron’s president of Latin America and Africa, said today during a conference in Mexico City. Chevron produces more crude in the U.S. section of the Gulf of Mexico than anyone except Royal Dutch Shell Plc and BP Plc, according to the U.S. Interior Department.

“We are not here to replace Pemex,” said Moshiri, who oversees exploration and production projects from Argentina to Angola. “We are not here to change their strategy. We are here to complement what they are doing.”

Chevron, based in San Ramon, California, is waiting for the passage of Mexico’s secondary energy legislation before deciding the sites of the first partnerships in Mexico. The legislation, which will determine Pemex’s participation in new projects and the tax structure for private companies joining the newly opened energy market, could be approved as soon as June, according to Mexico’s two largest political parties.

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Mexico passed an energy law last year that ended Pemex’s 75-year production monopoly to allow for private firms to tap the country’s 13.44 billion barrels of proven oil reserves. Private investment is anticipated to generate an additional $30 billion annually and create as many as 2 million jobs, Mexico’s energy ministry has said.

“We look for the opportunity that brings the most value to the Mexican government, the Mexican people, and our shareholders,” Moshiri said. “We are a huge company. We can invest money in conventional, deepwater, or shallow water. What drives our decision is really to see what is the best for everybody.”

Exxon Mobil Corp. and Royal Dutch Shell Plc are the world’s first- and second-biggest energy companies by market value. Pemex and Exxon signed a technical collaboration agreement last year before the energy law was approved by President Enrique Pena Nieto in December.

“We are going to align our strategic direction in Mexico with Pemex,” Moshiri said. “Our future in Mexico is based on building this exisiting partnership.”

Chevron added 0.2 percent to close $125.24 in New York.

--With assistance from Joe Carroll in Chicago.