Unitized We Stand, Divided We Fall: A Mexican Response to Karla Urdaneta's Analysis of Transboundary Petroleum Reservoirs in the Deep Waters of the Gulf of Mexico

By Grunstein, Miriam | Houston Journal of International Law, Spring 2011 | Go to article overview

Unitized We Stand, Divided We Fall: A Mexican Response to Karla Urdaneta's Analysis of Transboundary Petroleum Reservoirs in the Deep Waters of the Gulf of Mexico


Grunstein, Miriam, Houston Journal of International Law


I.   INTRODUCTION

II.  TRANSBOUNDARY RESERVOIRS CAN BE ADEQUATELY
     ADDRESSED WITHOUT OVERARCHING MEXICAN ENERGY
     REFORM

III. TRANSBOUNDARY RESERVOIRS CAN BE ADEQUATELY
     ADDRESSED THROUGH OVERARCHING ENERGY REFORM,
     BUT A CONSTITUTIONAL AMENDMENT IS UNNECESSARY

IV.  TRANSBOUNDARY RESERVOIRS CAN BE ADEQUATELY
     ADDRESSED THROUGH DIPLOMACY .

V.   ONCE THE LEGAL FRAMEWORK IS READY FOR
     UNITIZATION, SO WILL EVERYONE AND EVERYTHING
     ELSE

VI. CONCLUSION

I. INTRODUCTION

Two very different energy industries exist on each side of the U.S.-Mexico border. Market diversity is imprinted on the U.S. model, but the Mexican model rests on exactly the opposite principle: monopoly. (1) Thus, one of the things Mexican travelers often notice in the United States is the variety of names and colors in U.S. gas stations. Some Mexicans may even be confused by the price variations between one gas service station and the next; the idea of a competitive fuel market is alien to them. (2) Those who have never lived outside Mexico know Petroleos Mexicanos (Pemex), the national oil company, as their life-long and sole hydrocarbon producer and supplier. (3) Pemex's green and red logo guards every well, refinery, and service station in Mexican territory. (4)

The dichotomy between a monopoly on one side of the Gulf of Mexico and a fully open market on the other has clearly delineated technical, commercial, and regulatory development of each national industrial setting. On the U.S. side, there has been vigorous activity. (5) The companies working there have founded a new world above and beneath the surface of the Gulf of Mexico. (6) The landscape on the U.S. side of the maritime border is awesome in the strict meaning of the word: One is overtaken by awe seeing the animated cities of steel floating in the middle of the ocean. (7)

On the contrary, from the perspective of its petroleum industry, the view of the Mexican side of the Gulf is full of unexploited potential. (8) This side of the Gulf is virginal, untouched as it was on the day of the continental divide. (9) This is the result of many complex factors. History, politics, and constitutional and legal reasoning in Mexico are often referred to when explaining why Mexico has drawn the line so clearly between its side of the Gulf and the other. (10)

In her article on transboundary reservoirs between the United States and Mexico, Karla Urdaneta accurately notes and intricately describes the differences between each country's hydrocarbon legal regime, (11) and she provides an impeccable reconstruction of the existing bilateral instruments governing the U.S.-Mexico maritime boundaries. (12) Urdaneta deftly describes the legal challenges that would arise if transboundary hydrocarbon reservoirs were discovered between the two countries, (13) and she presents a series of interesting cooperative solutions based on international law and commercial practice. (14)

Because Urdaneta has compiled comprehensive research and provides rigorous insight on the international and domestic legal frameworks concerning U.S.-Mexico transboundary reservoirs, this response will address some complementary issues which may provide further insight about the challenges bound to be faced if hydrocarbons are indeed found in transboundary reservoirs. The existence of transboundary reservoirs would require the negotiation and execution of unitization treaties, agreements, and other related legal instruments between the countries and companies on both sides of the Gulf of Mexico. (15)

Upon reading Urdaneta's article, the first issue that comes to mind is the author's apparent certainty that transboundary reservoirs exist. (16) Commercial hydrocarbon deposits do exist near the maritime boundary on the U.S. side, (17) but there is no conclusive evidence that those deposits extend into Mexico's jurisdiction. (18) In fact, the governments of both countries recently denied any knowledge of scientific data proving the presence of transboundary deposits. …

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