EXCLUSIVE: U.S. Government Loaned Mexican Government More Than $1 Billion to Drill Oil in Gulf of Mexico Last Year; Has $1 Billion More Planned For This Year
September 7, 2010 - 7:03 PMThe U.S. Export-Import Bank, an independent federal agency, loaned more than $1 billion to the Mexican state oil company PEMEX in 2009 to support the company's oil drilling in the southern Gulf of Mexico.
On May 27, after the British Petroleum oil spill, President Obama imposed a moratorium on U.S. deepwater drilling in the Gulf, effecting 33 deepwater drilling rigs in the region.
PEMEX was the Export-Import Bank’s largest borrower in 2009 and has borrowed $8.3 billion from the U.S. federal government since 1998. Under the 2009 loan agreements, PEMEX agreed to contract with American firms and purchase equipment from American manufacturers in exchange for the money.
One loan, worth $600 million, went to finance the development of 18 oil and natural gas fields in the Bay of Campeche in the southern Gulf of Mexico. Campeche is the area where the majority of Mexico’s oil and gas production takes place and is located just north of the Yucatan Peninsula.
Another loan, worth $300 million, went to fund the building of oil production facilities in Mexico’s Cantarell offshore oil field, which provides a large portion of Mexico’s oil production, according to the U.S. Energy Information Agency (EIA).
The $900 million in combined loans occurred in April of 2009.
Another $150 million in Export-Import Bank loans was made in May of 2009 to support PEMEX’s Strategic Gas Program, including natural gas production in the Gulf of Mexico.
Mexico is America’s second largest source of foreign oil, according to the EIA, accounting for 1.2 million barrels per day in imports--200,000 more barrels per day than from Saudi Arabia. Because the United States accounts for a large share of Mexico’s oil exports, it is inevitable that the country will import oil produced as a result of federal loans, meaning that the U.S. federal government loaned money to the Mexican government to produce oil so that we could import it.
According to EIA figures, America imported 442 million barrels of oil from Mexico in 2009, the same year PEMEX received over $1 billion in U.S.-government financing. Petroleum products, oil and natural gas, are Mexico’s largest exports, accounting for 40 percent of government revenues and 15 percent of GDP. Mexico is one of the largest oil exporters in the world and PEMEX is one of the world’s largest petrochemical corporations.
The Export-Import Bank also has approximately $1 billion in loans to PEMEX scheduled for fiscal year 2010. The loans, which are currently awaiting congressional approval, would fund four projects that, like the 2009 loans, would result in PEMEX employing U.S. oil contractors and engineers for both on-shore and off-shore oil production.
The Bank’s activities are not affected by the Obama administration’s ban on offshore drilling because that ban applies only to deepwater drilling--drilling in 500 meters of water or deeper--and the PEMEX projects financed by the Ex-Im Bank are shallow-water projects.
Because the 2010 loans have not been approved yet by Congress, the Export-Import Bank had not announced specific amounts for each project. Congress need only object to the loans to prevent the funds from being disbursed. It does not need to specifically pass legislation to block the funding of Mexican off-shore oil production.