Private oil cos contracts ready by early '10-Pemex

MEXICO CITY Dec 11 (Reuters) - Contracts that will allow Mexico to hire private energy companies as service providers in its traditionally closed oil sector will be ready early next year, the head of state oil company Pemex said on Friday.

Pemex has been working on the contracts since Mexico's Congress passed reforms to the country's energy legislation allowing Pemex to offer cash-based incentives to its contractors.

The government of President Felipe Calderon hopes to use these contracts to bring in foreign capital and expertise to turn around the country's flagging oil industry.

"In this moment we are working on a contract model in particular for the Chicontepec project, for mature fields and for shallow and deep waters," said Pemex Chief Executive Juan Jose Suarez at a Senate hearing.

Suarez said Pemex was currently working on internal rules and regulations to support the new contractual model and it hoped to be able to offer the first contracts in the first quarter of 2010.

Pemex has missed several self-imposed deadlines for completing the work on the contracts. The company had originally hoped to present a model contract in September.

A legal challenge to the new rules for foreign development of oil resources could also lead to delays, according to Mexican oil analysts.

Mexican oil production has slumped by nearly a quarter since peaking in 2004, and although officials have said they are confident output can be held steady at current levels of around 2.5 million barrels per day over the next several years, Pemex is anxious to gain access to new technologies.

The company's controversial Chicontepec project, which has been heavily criticized by some senior energy officials as a waste of money, is expected to be a top priority for Pemex.

Chicontepec is believed to hold billions of barrels of crude in more than two dozen fields but producing the oil is challenging due to low reservoir pressure and challenging geological formations that lock the oil into tight formations. (Reporting by Robert Campbell and Jason Lange; Editing by Christian Wiessner)