Bush expected to seek Mexican oil guarantees

MONTERREY, MEXICO — MONTERREY, Mexico -- With war threatening U.S. energy sources in the Persian Gulf, President Bush arrived here yesterday expecting to press for "guaranteed access" to Mexican oil "during times of crisis," said senior U.S. trade representatives.

President Carlos Salinas de Gortari warmly greeted Mr. Bush and took him to a Mexican-style rodeo at the Salinas homestead 80 miles north of here.


The president flies back to Washington today after talks that are expected to include trade, the gulf situation and an easing of Mexico's rigid ban against foreign oil investments.

The U.S. trade representatives noted that the access guarantee would simply mean a Mexican pledge not to cut off oil in the event of a crisis, such as a war.


There has been no threat that it would do so, but such an apparently innocuous guarantee between two countries has assumed an added urgency with the likelihood of a war with Iraq and the possible crippling of Saudi Arabian fields, the principal source of foreign oil, they said.

Although the guarantee is expected to be negotiated next year as part of a Mexican-U.S. free trade agreement, oil analysts say it could set the agenda for the more imminent prospect of war and a deepening global energy crisis.

If war should break out and the gulf oil facilities are crippled, the world could face an energy crisis that could last several years. Some experts have predicted that oil prices could skyrocket to $65 a barrel, or about four times what it was before the Iraqi invasion of Kuwait.

The analysts said a war also might jolt Mexico into lifting its ban on foreign investment in the state oil monopoly and allow immediate exploration for oil that otherwise would not be available for a decade.

Mexico, the fourth-largest U.S. oil provider, currently lacks the capital to exploit its reserves, which some experts predict could be available in three years.

Venezuela, the largest Latin supplier to the United States, is expected to lift its ban on foreign oil investors in hopes of at least doubling available reserves in six years.

The long-term aim is to increase non-gulf reserves so that the West is less dependent on that volatile region, analysts say.

"In the event of a gulf war, Mexico would not be able to respond without a massive infusion of big bucks," said a Western oil executive.


"If the Saudi fields are damaged by Iraq and the world faces a long-term global energy crisis, Salinas will be under tremendous pressure to do something, along with the other non-gulf producers," he said.

"An energy-induced world recession is the last thing Mexico needs or wants."

Foreign access to Mexican oil is an extremely sensitive subject for Mr. Salinas since it is viewed by Mexicans as a symbol of their sovereignty and is currently barred by the constitution.

In light of the gulf crisis, Mexico this year increased its export production by 100,000 barrels, but this is considered a drop in the bucket in view of U.S. daily consumption.

Most oil questions were expected to be off the table in the free-trade negotiations scheduled to begin next spring. Mexico nationalized the oil fields in 1938 in a popular outburst of national will against the foreign -- largely U.S. -- owners.