The New York Times
March 23, 2000

Mexico to Raise Oil Output, but Tells U.S. Not to Be Pushy

          By JULIA PRESTON

          MEXICO CITY, March 22 -- Joining the frenetic jockeying before
          an oil producers' meeting next week, Energy Minister Luis Téllez
          said today that Mexico had decided on an oil production increase of less
          than 325,000 barrels a day starting in April.

          Picking his words carefully, Mr. Téllez cautioned the United States not to
          be too blunt in pressing the oil nations for increases in output, warning
          that heavy lobbying could backfire by stirring nationalist political
          opposition. "The big players of the oil market have already said there
          needs to be more oil," Mr. Téllez said. "The message has gotten through.
          The facts are there. I think a proper decision will be taken."

          Some American lawmakers -- their constituents paying soaring prices for
          home heating oil and facing the prospect of continued steep gasoline
          prices -- have sought to press the producers to pump more oil. Senior
          members of Congress have called on the Clinton administration to take
          antitrust action against the Organization of Petroleum Exporting

          Mr. Téllez said President Clinton had "achieved a very fine balance" with
          his relatively mild suggestions to speed up production.

          Since Mexico is not a member of OPEC, Mr. Téllez said he would not
          attend its oil ministers' meeting that begins on Monday in Vienna, but
          would send a deputy. He has been on the phone in recent days, telling
          many of his counterparts that Mexico has decided to raise output and
          encouraging them to do the same.

          Mexico will disclose the final figures for its increase as soon as OPEC
          makes it announcement. Starting in March 1998, when demand was
          lagging and prices down, Mexico responded with cutbacks that
          amounted over time to 325,000 barrels a day. The reductions were part
          of an agreement with Saudi Arabia and Venezuela that expires on April
          1. Mr. Téllez said the new increase would not completely erase that
          cutback. Mexico, the world's fifth-largest oil producer, now pumps 2.9
          million barrels a day.

          With a presidential campaign under way in this country, the government's
          opponents have accused Mr. Téllez of deferring to the United States and
          sacrificing Mexican interests by favoring larger supplies of oil to bring
          down prices. A newspaper cartoon depicted him as receiving credentials
          as "the second ambassador from the United States."

          But Mr. Téllez argued that continued high prices could slow the world
          economy and eventually depress growth in Mexico. "We are most
          interested in having a dynamic world economy," he said, adding: "What
          we want is a stable, profitable price. For that, we need a stable supply of

          A government poll shows that most Mexicans, despite their strong
          patriotic attachment to the nationalized oil industry, agree with him. In a
          nationwide survey, 75 percent approved of raising production to bring
          down prices.

          In December 1998, Mexico was getting less than $8 a barrel for its
          crude oil. Today, after price increases powered by OPEC's cutbacks as
          well as the continued economic boom in the United States and the
          rebound of some Asian nations, Mexican oil is selling at $24.26.