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Mexico4th Largest Oil Producer*


September 3, 2002

Mexico to Increase Crude Oil Output


EXICO CITY, Sept. 2 (Bloomberg News) — Mexico, the world's fourth-largest oil producer, plans to increase its crude oil output by about 13 percent next year, to around 3.65 million barrels a day, according to a presidential report submitted to Congress today.

President Vicente Fox's second annual report on the state of the nation also said Mexico planned to increase production of crude oil to about 4.1 million barrels a day by the end of his term in 2006, from an average of 3.22 million barrels in the first eight months of 2002.

Analysts say Mr. Fox's plan may be too ambitious unless Congress reduces the fiscal burden on the state oil company, Petróleos Mexicanos, which pays about 60 percent of its revenue in taxes, leaving little for investment in exploration and production.

"The company needs more resources to invest," said José Coballasi, an analyst at Standard & Poor's. "Fox's administration has done a lot to signal to the public and to legislators that changes are needed."

Mr. Fox hopes to raise output of Mexico's heavy crude by 10 percent in 2003, to about 2.47 million barrels a day, and increase production of light and super-light crudes by 15 percent, to 1.18 million barrels a day, the report said.

Mexico was ranked the world's fourth-largest crude oil producer in July, according to the International Energy Agency, a part of the Organization for Economic Cooperation and Development.

The presidential report also forecast a 3.2 percent increase in Mexico's output of refined products after finishing expansions at four of the country's six refineries, reversing years of declines in capacity.

Refining capacity at Pemex, as the state oil company is known, has declined by about 2.3 percent, to an average of 1.25 million barrels of crude oil a day processed last year from 1.28 million barrels a day in 1998.

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