Pemex, Mexico’s state-owned oil company, said today that it plans to award $5 billion in contracts to build 50 offshore oil platforms in the Gulf of Mexico, Bloomberg reports.
The statement follows Wednesday’s announcement that the company is looking for bids on a $1 billion project to buy crude extraction equipment for production in the Bay of Campeche.
Pemex, Latin America’s largest oil producer, has been looking to boost its offshore oil production to offset the rapid decline of Mexico’s onshore reserves. The company – which generates about 15% of Mexico’s export earnings and accounts for about 40% of the state budget – has suffered numerous setbacks in recent years, due in part to the country’s deteriorating security situation.
The country’s powerful drug cartels, under pressure from a prolonged two-front war, have turned to the national oil company as an alternative revenue source. Money laundering at gas stations, oil theft from PEMEX pipes and kidnappings of company executives are all on the rise. Unofficial estimates put PEMEX cartel-related loses at about $2 billion annually, according to a report from the Journal of Energy Security.
Violence and kidnappings now threaten to get in the way of production in prime areas, including the Burgos Basin, Mexico’s biggest natural gas field. The basin stretches across Mexico’s northern border states of Tamaulipas, Nuevo Leon and Coahuila – which also happen to be the site of a brutal turf war between Los Zetas and the Gulf Cartel.