Deck Reshuffled

In the blue-chip game of international oil, Mexican Oil Czar Antonio J. Bermudez thought he had an ace in the hole. Though Mexico had kicked out U.S. oil companies in 1938 and seized their properties, he thought they would crawl back if egged on by the State Department.

Bermudez' hunch was that Mexican oil reserves would be needed by the U.S. in case of another war. But most U.S. companies have refused to go back under the poor terms offered by Pemex, the government oil monopoly. Hat in hand, Bermudez has had to ask the U.S. to put up $200 million for an oil development loan.

Last week Bermudez' hole card looked more like a trey than an ace. Mexico's oil is not "vital" to U.S. defense, a consultant told the State Department. The consultant was Max W. Ball, a one-time director of the Oil and Gas Division in the Interior Department. Ball reported that Canada, where U.S.-controlled oil companies have already made rich discoveries, "offers more alluring prospects, geologically and politically, than Mexico."

How alluring? Ball estimated unproved reserves of the new Canadian fields at a whopping 20 billion barrels, contrasted to 5-15 billion barrels in Mexico. Furthermore, Ball saw the $200 million loan sought by Mexico as just a starter. Since Mexico had drilled an average of 35 wells annually in the last ten years, and "it might take 10,000 or more" to develop the fields fully, the eventual cost might run from $2 to $4 billion. The U.S. "cannot afford" to lend that much money, especially since chances are slim that Mexico's monopoly could do the job.

Consultant Ball said that if Mexico would open the door to U.S. companies on the same terms offered by other nations, a loan would be advisable. But if

Mexico clung to its present restrictions on foreign exploration, a loan "would be a disservice" to it and the U.S. Since oilmen guessed that Canada, in five years or so, would be one of the world's major producers of oil, it looked as though the longer Mexico waited, the slimmer would grow its chances of developing its oil lands.

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