CANTARELL, in the Gulf of Mexico, was once the world's biggest offshore oilfield, holding over 35 billion barrels of the black stuff. Now, after nearly three decades, it is running out. At its peak in 2004 it produced 2.1m barrels of oil per day (b/d), making up 60% of Mexico's total output. That figure has already fallen by more than 500,000 b/d and could fall by another 200,000 b/d by the spring.
This is a worry for both Mexico and the world. Although Mexico contains less than 1% of the world's proven oil reserves, it is the sixth-largest producer. Its output of 3.1m b/d is well above that of Venezuela or Kuwait. And although oil no longer dominates the Mexican economy—even at recent high prices it provided 16% of exports in 2006, down from 68% in 1982—it lubricates the public finances, contributing nearly 40% of federal revenues.
The obvious solution is to privatise the industry, but that is politically impossible. The state oil monopoly is both popular and constitutionally mandated. So Mr Calderón and other politicians have been searching for ways to loosen the monopoly while respecting the constitution.
The Senate's energy committee is holding a “private, technical debate” on how to do this, according to Rubén Camarillo, a senator from Mr Calderón's centre-right National Action Party. The purpose is to try to reach an all-party consensus by February. So far there is “agreement about what needs to be done, but not how to do it,” says Mr Camarillo.
Importance: Reforming its oil production would be helpful to Mexico's economy as would increased privatization. Politically, President Calderon could risk his precarious legitimacy by implementing these reforms that could test the Mexican constitution as well as bring into conflict political parties.
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