BUSH IS DUE TO VISIT MEXICO IN SEARCH OF OIL AND POWER

MEXICO CITY, Feb. 12 President Bush comes to Mexico on Friday, and at the
top of his agenda, alongside trade, immigration and drugs, is his vision of
an across-the-border bargain to allow billions of dollars of energy to flow
to the United States.

Such a deal, part of his larger plan to expand trade between the two
countries, could help stave off debacles like the California brownout and
liberate the United States from its addiction to Persian Gulf oil, Mr. Bush
says.

Only three obstacles stand in its way: the laws of physics, the laws of
supply and demand, and the laws of Mexico. There may be a fourth: It would
take many billions of dollars in American investment in Mexico to make it
happen.

Mexico imports huge quantities of natural gas and gasoline from the United
States, not the other way around. Its power grid cannot handle a torrent of
electricity flowing north. Its Constitution all but prohibits foreign
control of energy production. And Mexico will require an investment of $200
billion or more simply to meet its own energy needs. It does not have the
money to pay for it itself.

People from the oil business, like President Bush and Vice President Dick
Cheney, have the habit of thinking big. So does President Vicente Fox, who
once ran Coca-Cola's Mexico operations. And an energy policy that would
reach from the Yukon to the Yucatan peninsula, weaving together the United
States, Mexico and Canada, is a big dream indeed. Mr. Bush and Mr. Cheney
have talked it up, though not in any great detail, from the day they were
nominated.

But "it's going to be very difficult for them to come up with a joint
policy with Mexico that delivers the goods -- namely energy," said Sondra
Scott, Latin America director for Cambridge Energy Research Associates, a
consulting firm.

Mr. Bush has not been much more precise about his plans than he was in the
first presidential candidates' debate in October, when he mentioned the
need for "a hemispheric energy policy where Canada and Mexico and the
United States come together."

"I brought this up recently with Vicente Fox, who's the newly elected
president," he said. "He's a man I know from Mexico. And I talked about how
best to be able to expedite the exploration of natural gas in Mexico and
transport it up to the United States, so we become less dependent on
foreign sources of crude oil."

"Natural gas is hemispheric," he has said. "I like to call it hemispheric
in nature because it is a product that we can find in our neighborhoods."

When the electric power squeeze hit California last month, he said, "The
quickest way to have impact on the energy situation is for us to work with
Mexico, and a certain extent Canada, to build a policy for the hemisphere."
Last week, he said, "We need more product, and it doesn't matter where the
product comes from."

Mexico has plenty of natural gas and oil in the ground but lacks the
technology and money to exploit them fully.

But in Mexico, which nationalized the oil industry in the 1930's, state
control of energy has been a point of pride for past presidents and
politicians. Mr. Fox says he welcomes foreign investment, but first he must
persuade Mexico's Congress to rewrite the laws to allow a mix of public
ownership and private development in energy production. Then the United
States and other nations must pour money into Mexico, scouring the land for
trillions of cubic feet of natural gas and millions of barrels of oil.

And that can be risky, as Mr. Bush knows: the oil exploration company he
once ran in Texas lost a small fortune, raising $4.67 million from
investors but returning only $1.55 million. "Bush can come to Mexico and
put a lot of money on the table," said George Baker, director of Mexico
Energy Intelligence, a Houston company. "Or he can encourage Mexico to let
private companies in. This will require legal changes and a new way of
thinking." Without them, he said, there is little chance for the United
States to buy much power from Mexico.

Mexico's state-run oil monopoly, Pemex, is the world's fifth-largest oil
company. It produces all of Mexico's oil and extracts all its natural gas.

But it has spent about $5 billion in the last five years buying American
gasoline. And Mexico desperately needs more natural gas from the United
States; its imports are likely to rise to $17 billion a year in this
decade, its energy ministry projects.

Pemex will have to invest tens of billions simply to keep up with domestic
demand for gasoline and natural gas. Much of that money must come from
abroad. But foreign investors are wary of sinking money into a
state-controlled enterprise. And though Mr. Fox says he wants to open up
Mexico's petrochemical industry to private companies, he has not spelled
out how.

Electricity in Mexico is a tangle. Under the Constitution, the government
controls almost all the power plants, the transmission wires and the
market. Mexico's grid cannot plug into the United States, except for three
connections on the borders of California and Texas. Last month, Mexico
began sending about 50 megawatts a day to California, a one half of one
percent of the state's needs. "Neither the transmission grid nor the
regulations exist today for more power to flow north," Ms. Scott said.

Juan Camilo Mourino, president of the energy committee in the lower house
of Mexico's Congress, said that in the coming decade, Mexico "will have to
double the amount of electricity we generate," and "at least double natural
gas production" to meet its own needs.

And Ms. Scott, the consultant, said the country will require "$50 billion
or 60 billion in capital expenditures" before it can produce enough natural
gas to export it -- part of a larger need to invest $200 billion to $250
billion in the energy sector by 2015.

"Pemex will not be spending this money," she said. "They can't." Without
the money, she suggested, the policy Mr. Bush proposes may be a pipe dream.