Don’t cry for me, PEMEX

I haven’t had the time to digest the latest proposal from the Calderón Administration, but with each new version of  an “energy reform” bill, it is less and less likely that the eventual reforms will de-nationalize the “paraestatal”

I am using the Mexican term for PEMEX — paraestatal — because I can’t think of a word in English that describes PEMEX:  a profit making government enterprise.  It’s an oil company AND a federal cabinet agency AND has social, political and economic responsibilities outside the normal purview of either a business or a bureaucracy.

If you look at PEMEX solely as an oil company, then it is perfectly logical for it to seek foreign partners.  An oil company would presumably want to increase their access to supply (deep water drilling) and seek the capital to do so, even if it meant sharing the profits.  BUT… that’s assuming oil companies need to grow.

It was recently announced that PEMEX had gone from 7th to 10th place among the oil giants.  SO?  That only matters if you’re talking about continued high exports, and not about PEMEX’s other role — providing MEXICO with cheap oil.  Even with falling reserves, Mexico has plenty of oil for its own needs.  WIth fiscal reforms designed to lessen the state’s dependency on oil revenues, exports should be less important.  It’s not Mexico’s oil consumers who need to worry… it’s the U.S. that depends on Mexican oil, and has the largest stake in continued exploration (and exploitation) of Mexican fields.

The “legitimate government” (the friends of AMLO) has been leaking documents from PEMEX (and AMLO still has strong ties to the paraestatal from his days as an oil workers’ union leader) has been leaking documents that suggest the “de facto government’s” real interest is in providing a way for the Spanish oil giant, REPSOL.  Pemex owns a 4.5% stake in Repsol, but it appears proposals to open PEMEX to foreign investments have mostly been crafted to benefit Repsol.

Within congress, the leftist coalition, FAP, and much of PRI has opposed privatization, as has the Catholic Church.  From what I can tell, the latest Administration bill seeks to mollify at least enough PRI senators and deputies to give the bill a chance.  It would allow third-party contracts for some services, including refining and pipelines (which would remain the property of the third party… and has already been rejected by FAP) would have to maintain a “Mexican personality.”  If this bill passes, at worst, the investors are going to be Mexican companies (in theory anyway) and — even if Mexican oil exports drop — it’s not going to mean a return to the “bad old days” of foreign control.  In the “new world order” they already do that through the banks, right?