Search

 

Cablegate: Gom Sharpens Focus On Transboundary Reservoirs - Focus On

VZCZCXYZ0001
RR RUEHWEB

DE RUEHME #3014/01 2841338
ZNR UUUUU ZZH
R 101338Z OCT 08
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC 3541
RUEHC/DEPT OF INTERIOR WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFIUU/DEPT OF ENERGY WASHINGTON DC
RHEHAAA/NSC WASHINGTON DC

UNCLAS MEXICO 003014

SENSITIVE
SIPDIS

STATE FOR WHA/MEX, WHA/EPSC
STATE FOR L/OES KIM
STATE FOR EB/ESC MCMANUS AND DUGGAN
USDOC FOR 4320/ITA/MAC/WH/ONAFTA/GWORD
USDOC FOR ITS/TD/ENERGY DIVISION
TREASURY FOR IA (ALICE FAIBISHENKO)
DOE FOR INTL AFFAIRS ALOCKWOOD, GWARD AND RDAVIS
DOI FOR MMS ORR, TEXTORIS AND KARL

E.O. 12958: N/A
TAGS: ENRG EPET ECON PGOV MX
SUBJECT: GOM SHARPENS FOCUS ON TRANSBOUNDARY RESERVOIRS - FOCUS ON
BILATERAL NEGOTIIONS

REF: Mexico 2657

1. (SBU) Summary: A technical workshop on transboundary reservoirs
in Cuernavaca October 3-4 was organized to provide senior GOM
officials with information on possible models for negotiating a
bilateral treaty with the U.S. In attendance were numerous academic
experts and consultants. The level of engagement and the details of
the discussion demonstrated the GOM's commitment to follow up
quickly on their August 20 proposal to initiate bilateral
negotiations. GOM and USG officials met on the margins of the
workshop to discuss potential next steps. From post's perspective,
agreeing to open a bilateral dialogue on transboundary reservoirs
would promote information exchange. Conversely, not engaging could
fuel sensitivity about foreign designs on Mexican oil and impede
efforts to reform the energy sector. End Summary.

2. (SBU) Secretary of Energy Georgina Kessel, Foreign Ministry
Legal advisor Joel Hernandez and approximately twenty other senior
Mexican officials from the Secretariat of Energy (SENER), Foreign
Ministry (SRE) and Pemex attended a by invitation only two-day
workshop on transboundary hydrocarbons October 3-4 in Cuernavaca.
The only other participants in the workshop were speakers from
academia and the private sector, Texas Railroad Commissioner Victor
Carrillo, representatives from MMS and Emboff.

3. (SBU) The objective of the workshop (which was cosponsored by
SENER, the Mexican university UNAM, and the Jackson School of
Geosciences at the University of Texas, Austin) was to offer senior
Mexican decision-makers information on the international experience
and best practices for the development of transboundary hydrocarbon
resources. An expert on joint development, unitization and
framework agreements presented a variety of existing models and
demonstrated how they have been applied in international agreements.


USING THE UK-NORWAY MODEL
-------------------------

4. (SBU) GOM officials seemed to agree that the Framework
Agreement between the UK and Norway offers the most appropriate
model for U.S.-Mexican cooperation in the Gulf. The Framework
Agreement is executed between governments, not companies, and is
intended to cover large tracts. After a discovery is made, this
expert recommended "unitization" as the method to establish equity
share in transboundary reservoirs. (Note: MMS officials and Econoff
did not offer an opinion on this framework agreement or other parts
of the discussion. Legal and technical experts in the U.S. will
have to consider the UK-Norway model and other agreements carefully
before determining whether the USG shares the GOM conclusion. End
note.)

5. (SBU) Conference participants asked detailed questions
regarding the sharing of confidential information and building trust
during negotiations. One participant asked whether a reservoir can
be divided and exploited on both sides, an expert responded that the
only way to optimally develop a joint reservoir is with a joint
development plan and one principal operator.

6. (SBU) Several experts focused on the legal obstacles and
challenges to negotiating transboundary agreements as well as the
geological potential for shared resources between the U.S. and
Mexico in the Gulf. There was a discussion between participants on
whether the USG would be in violation of international law if it
allowed companies to extract hydrocarbons from a joint reservoir
absent a bilateral treaty. Senior GOM officials downplayed this
scenario.

7. (SBU) Industry and MMS officials clarified that no
transboundary reservoirs have been discovered in the Gulf of Mexico.
They added that currently no exploratory drilling is being
conducted in leased blocks along the US-Mexico boundary in the Gulf.
Mexican officials were not convinced and stressed the need for the
USG and GOM to work quickly to address potential transboundary
reservoirs.

Proposed Negotiation with the USG:
----------------------------------

8. (SBU) On the margins of the workshop, SRE Ambassador Joel

Hernandez and a small group of officials from SRE, SENER and Pemex
who had participated in the August 20 bilateral consultations on the
Western Gap Treaty (see reftel) met informally with MMS officials
Kevin Karl, Michael Prendergast, Steve Textoris and Econoff to
discuss the Mexican proposal to negotiate a Treaty on Transboundary
Reservoirs with the USG. The GOM is clearly eager to move forward
and Hernandez asked how the USG planned to respond to the September
10 Mexican proposal. Econoff responded that Washington is reviewing
the diplomatic note but had several questions:

-- Memorandum of Understanding: GOM officials clarified that the
MOU they propose in the diplomatic note would focus on information
sharing. Perhaps the information sharing portions of the Western
Gap Treaty could serve as a model. Mexico would also like to see
some type of indication (although the language could be flexible)
that the MOU would be a first step in a broader negotiation. We did
not respond to the Mexican offer to provide us with a first draft of
an MOU, offering that language like this would have to be crafted
jointly, but it is possible that the GOM will begin preparing a
draft nonetheless.

-- Land Border: We mentioned that including offshore and onshore
reservoirs in a negotiation would complicate the process for a host
of reasons, including different and various stakeholders. This,
however, did provide a stepping stone to cross-border renewable and
alternative energy between the US and Mexico. The Mexicans had a
number of questions regarding transboundary issues which would best
be addressed by legal experts in Washington DC.

-- Renewable Energy: The MMS pursued the DOI AS/LM's interest in
exploring cross-border and bilateral arrangements for renewable and
alternative energy. The Mexicans expressed interest in further
discussions on this issue.

-- Briefing Industry: Hernandez requested that the USG and GOM
coordinate closely before briefing industry on the Mexican proposal
to negotiate transboundary reservoirs and that both sides refrain
from meeting with industry until the Mexican energy reform package
is approved by Congress (i.e. November.) We agreed that some
combination of joint and individual briefings with industry may make
sense.

-- Task Force: Hernandez was eager to establish a "Task Force" to
start bilateral discussions on negotiating a possible treaty. He
suggested that a Mexican team could travel to Washington in November
to meet with US experts and continue exploring the ideas and
clarifying questions on both sides.

-- MMS Briefing: Karl extended an invitation to the GOM to visit MMS
offices in New Orleans for a briefing on unitization agreements that
the USG uses. GOM officials were enthusiastic and agreed to follow
up.

Comment:
--------

9. (SBU) The timing of the workshop and the urgency that the
Mexican participants placed on working with the USG on a binding
bilateral agreement demonstrate that Mexico may believe that either
a transboundary reservoir has already been discovered or will be
discovered imminently. By engaging the USG on this issue, the GOM
hopes to have a bilateral agreement in place which would commit the
USG to a unitization agreement before a discovery is made. From the
GOM perspective, such an agreement would not only allow resource
sharing, but could also head off a negative domestic debate about
the "straw effect", which claims international oil companies on the
U.S. side of the boundary could siphon off significant oil reserves
from the Mexican side of the border.

10. (SBU) Although the issues involved will certainly prove
complex and difficult, we see value in at least opening a dialogue
with the GOM on this topic. A bilateral dialogue could open the
doors to information exchange and provide us with the seismic data
that we have long sought from Mexico. Refusal to sit down and start
talking about this could fuel Mexican sensitivity about foreign
designs on Mexican oil and impede efforts to open the Mexican energy
sector to fuller international participation competition.
GARZA

© Scoop Media

 
 
 
 
 
World Headlines

 

Werewolf: Gordon Campbell On North Korea, Neo-Nazism, And Milo

With a bit of luck the planet won’t be devastated by nuclear war in the next few days. US President Donald Trump will have begun to fixate on some other way to gratify his self-esteem – maybe by invading Venezuela or starting a war with Iran. More>>

Victory Declared: New Stabilisation Funding From NZ As Mosul Is Retaken

New Zealand has congratulated the Iraqi government on the successful liberation of Mosul from ISIS after a long and hard-fought campaign. More>>

Gordon Campbell: On The Current US Moves Against North Korea

If Martians visited early last week, they’d probably be scratching their heads as to why North Korea was being treated as a potential trigger for global conflict... More>>

ALSO:

Gordon Campbell: On The Lessons From Corbyn’s Campaign

Leaving partisan politics aside – and ignoring Jeremy Corbyn’s sensational election campaign for a moment – it has to be said that Britain is now really up shit creek... More>>

ALSO:

Another US Court: Fourth Circuit Rules Muslim Ban Discriminatory

ACLU: Step by step, point by point, the court laid out what has been clear from the start: The president promised to ban Muslims from the United States, and his executive orders are an attempt to do just that. More>>

ALSO:

 
 
 
 
 
 
  • Pacific.Scoop
  • Cafe Pacific
  • PMC