Mexico to boost oil production by 10% next month, official says

MEXICO CITY - Mexico's top energy official said Wednesday that his country would boost oil exports by about 10 percent, adding to global efforts to torpedo high crude prices.<br><br>The export increase

Monday, April 3rd 2000, 12:00 am

By: News On 6

MEXICO CITY - Mexico's top energy official said Wednesday that his country would boost oil exports by about 10 percent, adding to global efforts to torpedo high crude prices.

The export increase of 150,000 barrels per day will take effect next month, said Energy Minister Luis TÃ©llez.

Mexico's increase came on the heels of a decision this week by the Organization of the Petroleum Exporting Countries, or OPEC, to increase daily production by 1.45 million barrels.

The OPEC deal is expected to drive down the price of gasoline and other oil products within a month, U.S. officials say.

But energy experts warned that the OPEC agreement might not be enough without additional production increases by non-OPEC members such as Mexico, Norway and Oman.

Lower prices would help U.S. consumers.

Mr. TÃ©llez said they would also help Mexico, which exported more than $100 billion to the United States last year, or more than 20 percent of its entire economic output.

"Because of the [negative] effect of high prices on the growth of the world economy ... the government of Mexico decided to increase exports," Mr. TÃ©llez said in a news conference. "This is a figure that allows us to maintain control over the market."

Not so long ago, Mr. TÃ©llez was the worst enemy of gas-guzzling American motorists.

When the price of oil went below $10 per barrel in 1998, he orchestrated production cutbacks with Saudi Arabia and Venezuela, two OPEC giants.

That informal alliance, which some experts dubbed "virtual OPEC," drove oil prices to more than $34 a barrel three weeks ago.

But speculation that high oil prices could lead to an economic slowdown in the United States, or at least to interest rate increases to ward off inflation, caused Mexico to rethink its policy.

Mr. TÃ©llez was among the first foreign oil officials to say prices had gone too high, and he said he was in close contact with OPEC officials during their meeting in Austria this week.

"One message here is that by increasing production, Mexico is showing itself to be an energy ally of the United States," said George Baker, the director of Mexico Energy Intelligence, a newsletter in Houston.

"The other reading is that Mexico is being a dutiful member of virtual OPEC," he said. "The message there is that producing countries can stand up to consuming countries when it's in their interest. But they will also act to lower prices when that's in their interest."