PEMEX: off the table

There has been speculation (or maybe wishful thinking by some in the U.S.) that PEMEX would be privatized.  Why would that be a foreign affair?

Todays Jornada (my translation):

Mérida, Yuc. The Mexican president, Felipe Calderón, assured the press that the subject of privatization of Petróleos Mexicanos (PEMEX) was not raised during his discussions with his U.S. counterpart, George W. Bush in the Merida talks because, “it is exclusively a Mexican matter.”

“We have absolutely no intention of privatizing a company that only can belong to all Mexicans,” Calderón said in a Tuesday news conference at the Hotel Fiesta, where he has been staying during the talks.

The Mexican president added that “Yes we will have to resolve in the future, questions of sovereignty and consider alternatives,” but emphasized that “Congress decides” the future of the national oil congress.

Pemex is the second largest oil company in the world by some reckonings.   The largest, Aramco — as well as the  third (Petroleos de Venezuela) and fourth largest (China National Oil) are all state-owned companies. You’d have to go to the #5 oil company, Exxon-Mobile, before you found one that was privatized. But, then, it always had been.

Sure, it has been badly managed (name a state agency anywhere in the world that’s a model of cold-blooded corporate efficiency… PEMEX is also a social service agency in some ways.  Andres Manuel Lopez Obradór began his career as a PEMEX social worker).  And, yes, it needs working capital very badly (so does every other capital intensive investment in Mexico).  None of which argue for selling it off to the highest bidder (whom could just as likely be the Russian company Yukos, or the Venezuelans or the Chinese as any of the American or British companies who controlled Mexican oil production before 1938).

You need to remember that PEMEX was the first nationalized company of its kind.  Lazaro Cardenás had to go back to both Catholic Church documents, pre-Colonial Spanish law and even the Aztec legal system to cobble together a political and social theory for a nationalized resource company (and, something everyone conveniently forgets, to satisfy the Church, and win their “blessing” on the project — literally: the Cardinal of Mexico City and the Pope were both corralled into supporting the project publically — the private investors were compensated at rates agreed to by an international arbitration).

My feeling (I’m not prepared to offer a bunch of links by way of argument just now) is that the Fox Administration, like Salinas and Zedillo, had bought into the privatization theory, but that Fox, like Ronald Reagan, used political appointments to further ideological goals.

What I mean is that while Salinas (like George W. Bush) damaged state institutions by appointing cronies and incompetents (and outright crooks) which seriously damaged PEMEX, Fox (like Reagan) appointed people who knew exactly what their goals were — drive the “company” out of business to where sale to outsiders was an option that was salable to the voters. 

PEMEX probably will, as it does now, take on more joint ventures (often with other State-owned companies).  The left (which while FAP is not the numerical majority in Congress, has enough PRI and independent support to control legislation) has no major problems with joint ventures.  And, it has looked at alternative financing.  And, if PEMEX’s outside expenses (the social security network, the parallel public hospitals, etc.) were folded into other federal agencies, it would have a much healthier balance sheet.

In other words, don’t count on PEMEXxon-Mobil coming to a gas station near you any time in the near future.