US OFFICIALS EXPECT NAFTA TO YIELD LIMITED GAINS FOR ENERGY INDUSTRY

US OFFICIALS EXPECT NAFTA TO YIELD LIMITED GAINS FOR ENERGY INDUSTRY

Clinton administration officials said Wednesday the North American free-trade agreement will provide important opportunities for U.S. energy companies.

But they admitted the deal gains are limited by Mexico's refusal to open its oil and gas reserves to foreign ownership."We are not totally satisfied with the results," said Rufus Yerxa, deputy U.S. trade representative. "There are still restrictions in place, but there is no question Nafta makes important improvements."

"The Mexicans were adamant," said Bill White, deputy energy secretary. ''They didn't want anything that looks like working interests" in oil and gas holdings.

Mexico's Constitution prevents foreign ownership of oil and gas reserves, Mr. Yerxa said, and "that is not going to change no matter what."

Still, Mr. White said, Mexico agreed to increase the role of U.S. companies in its oil-field services and equipment sectors and allowed U.S. natural gas producers to deal directly with buyers in Mexico.

Also, he said, U.S. companies will play a big role in providing the financing, equipment and expertise to provide the electric generating capacity required to serve the growing Mexican economy.

Mr. Yerxa told the House energy and power subcommittee that Mexico also agreed to open much of its petrochemical industry to foreign competition.

The U.S. oil-field service and supply industry welcomed the chance to bid on contracts with Petroleos Mexicanos, the state-owned oil and gas conglomerate, said Lester Coleman, Halliburton's executive vice president and general counsel.

The Petroleum Equipment Suppliers Association, a trade group, recently completed a survey that showed that increased business with Pemex will add about 3,000 jobs to company payrolls, he said.

Thomas F. Cooke, chairman of Houston's Saratoga Resources, said independent oil and gas producers were "disappointed with the outcome of the Nafta negotiations," because of the restrictions on exploration and production, but welcomed the concessions in natural gas sales and electric power generation.

The subcommittee's chairman, Rep. Phil Sharp, D-Ind., said Mexico agreed to only modest limits on its state-owned energy monopolies - Pemex in the oil and gas industry and CFE in the electric sector.

He also questions Mexico's pledge to enforce tough environmental standards. Sharp brought up the example of the Carbon II plant, a large electric power station nearing completion in northern Mexico.

The location of the Carbon II plant, which is only about 20 miles from Eagle Pass, presents an environmental threat to the Big Bend National Park.

So far, CFE has refused to install pollution control equipment on the coal-fired plant that would meet U.S. standards for sulfur dioxide emissions.

Rep. Sharp said the Carbon II case shows the Mexicans are willing to use lax environmental standards for economic advantage.

Mr. Yerxa and Mr. White said the administration is pressing the Mexican government to upgrade the plant. Mr. White also said the president could prevent construction of transmission lines across the U.S.-Mexico border that would allow the electricity to be exported to U.S. customers.