On a speech in January 10, Mexican President Felipe Calderon talked about the benefits that some private investment could bring to Mexico's oil sector and the state owned company Petroleos Mexicanos (Pemex). While Calderon has not proposed openly any policy to allow private investment in the sector, talking about it - even in a passing way - is not a minor feat in a country that has considered anathema any non-public participation in the oil business.
Calderon has very good reasons to start putting this in the public debate. Pemex declared a loss of around $1 billion USD in 2006 (and not considerably better numbers are expected for 2007) despite the high prices of oil. Despite being one of the world's main producers and exporters of oil, Mexico has failed to sustain high levels of investment in exploration and refining. Thus, Mexico's main oil field off the coast of Campeche, Cantarell, is rapidly declining in production and very few new fields have been developed, especially in high-seas.
Mexico's Constitution doesn't allow foreign investment - not even domestic private investment - in what is considered the primary sector (exploration, extraction, production and refining). It only allows it for petrochemical secondary products.
Because of this, Mexico has become an importer of gasoline. Since no new refineries can be built in Mexico, Pemex is co-owner of a refinery in Texas and has proposed the construction of another in Central America.
Unless the current government is able to change the political environment and convince the opposition parties that private investment is needed (as well as a complete reform of Pemex), the day in which Mexico's oil reserves are depleted will come sooner than most Mexicans even suspect.
There are many ways in which this can be done. The model that Brazil has followed with the national company PetroBras is one that needs to be followed with great attention. I will talk more about Mexico's energy concerns and about the Petrobras models in further posts. I wanted to use this first post just to introduce this topic.
Mexico becoming an oil importer in some years would have an effect also in the already strained international oil markets.