The new improved PEMEX

David Shields provides a clear “energy analyst’s” overview of the new energy bill passed yesterday by the Chamber of Deputies. Despite lingering reservations by the “Lopezobradoristas” over one of the seven bills that allows PEMEX to “fast track” specific service contracts and continued protests over some specifics, the bill is a win for the left.

In today’s The (Mexico City) News Shields writes:

Pemex will remain bureaucratic and still largely tied to the government. There will be no real competition in the industry, no Pemex equity on the stock exchange, no upstream joint ventures, no downstream deregulation and no production sharing, nor booking of reserves, for companies who help Pemex in the oil fields. Reform will not reverse declining oil output in the medium term, as most oil fields are mature and no new fields have been discovered.

However, the new procurement laws will allow Pemex and its contractors to agree on changes to projects as they evolve, based on information gained during the project, to take into account changes in the prices of raw materials and equipment required, or to bring in new technology. They will also allow Pemex to have fast-track procurement procedures for emergency work, such as accidents and oil spillages.

On the remaining objections Bilhá Calderón, writing in English in El Sendero de Peje Jalisco complains

… three of the main interest points remain vague in it´s structure and meaning. The interpretations of the three remaining issues, leave specific gaps where it could be possible to extend contract to foreign companies, private companies and investors, which by Mexican law is considered high treason.

The “lopezobradoristas” are also expected to continue protests against provisions that give the PEMEX workers’ union a stronger role in management. As they have been saying for months, there are three main points that need to be addressed:

1) Relief PEMEX from its high taxes 2) Allow the earning of the company to be reinvested into elements that would make PEMEX grow on its own (technology, perforation, exploration, oil refining) and 3) To diminish the PEMEX´s syndicate Union´s monopolic power upon the decisions made about the company´s spending.

Foreign investments — which the A.P. and U.S. business media reports suggest is necessary for Mexico to reverse falling production (which is going to fall no matter what anyone does… there is only so much oil in the world) — were rejected, and the left’s main objectives — management reform — were largely accepted. This is hardly the “cosmetic” change north of the border sources are reporting.