U.S. Companies to Buy Mexican Fuel At a 'Fair' Price, Carter Announces

WASHINGTON--President Carter yesterday announced an agreement to purchase natural gas from Mexico at a price he described as fair to both countries.

He termed the agreement "a significant step toward providing a new energy source for our country."

Under the agreement, Mexican gas will be imported by a consortium of U.S. pipeline companies. Initial imports will represent about 8 per cent of total gas imports.

U.S officials said they viewed the agreement as significant because its establishes rules for U.S. access to Mexican gas reserves, believed to be among the largest in the world.

The agreement, reached after two years of intense negotiations, represents a breakthrough in the development of a "deeper and broader relationship" with Mexico, Carter said.


Although the price for Mexican gas will be higher than what U.S. companies now pay for Canadian gas, Julius Katz, assistant secretary of State, siad yesterday the higher price would be "hardly noticeable" because it will represent only 0.5 per cent or U.S. consumption.

The White House said the agreement "gives the Mexicans fair value for their gas while providing United States consumers with an additional gas supply at a price that is competitive with alternative fuels."

U.S. officials said Canada is likely to review its price for gas exports to the United States because the Mexican price is higher. They said the Canadian price could go to $3.30 or higher

At the outset, Mexican gas will cost the U.S. $3.625 per thousand cubic feet, the equivalent of $21 per barrel for crude oil.

Although this is sharply lower than Mexico's original demand of $4.95, the new agreement provides for future quarterly price hikes, according to an index that ties gas to the price of fuel oil.

Negotiators for both governments had pushed to complete the agreement in advance of the arrival here next Thursday of Mexican President Jose Lopez Portillo, who will confer with Carter on a variety of bilateral issues.

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