U.S., Mexico Agree on Joint Oil Exploration in Gulf; Can This Push Domestic Production?

February 21, 2012 2:25 AM EST

The U.S. and Mexico reached an agreement Monday to cooperate on oil and gas development in the Gulf of Mexico.

It was agreed at a meeting of the G20 group of industrial and developing countries in Los Cabos, Mexico.

The deal, negotiated last year, was signed by the U.S Secretary of State Hillary Clinton and the Mexican Foreign Minister Patricia Espinosa, with Mexico President Calderon acting as a witness.

This will mean that the U.S. companies and Mexico's state-owned Pemex could work in cooperation to develop waters that span the maritime border of the two countries. It is expected that this agreement will be helping companies have access to regions contemplated to be desirable for oil and gas development but long unexplored because of legal uncertainties.

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"Each of the nations will maintain sovereignty and their own regulatory systems," Ken Salazar, the U.S. interior secretary. "But what this signifies, and what may be the most significant part of the agreement, is that we're moving forward jointly with Mexico to ensure we have a common set of safety protocols," he added.

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The agreement will make up to 1.5 million acres of offshore territory claimed by the United States available for leasing as early as June.

According to the U.S. Bureau of Ocean Energy Management, the areas that are part of the agreement are expected to have as much as 172 million barrels of oil and 304 billion cubic feet of natural gas.

The Transboundary Agreement, as it is called, also allows U.S. and Mexican safety officials to work together to ensure the projects meet the safety standards of both nations.

With gasoline prices rising, Republicans have been blaming the administration for being slow for providing approval for more domestic drilling.

The new agreement is coming at a time when the White House is moving closer to approving drilling in Alaskan Arctic waters.

All these might help President Barack Obama present the case that his policies are resulting in an increase in domestic production and thereby controlling the gasoline price rise.

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