Sunday, January 20, 2008

Mexico, an oil importer?

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.

1 comment:

Angel Baca said...

Hi Cesar, are you from México?

I also wrote about the situation of Mexico and how it is compared to the Brasilian one.

I found somehing interesting this mornig about what the IZQUIERDA (socialism) of México thinks..I do not have a socialis-thinking but it is good to know both opinions

"The governments of the PRI, as the PAN, has said several times that "Pemex is not going to be privatized" and said that neither privatized health services IMSS, school or public roads. The roads were free simply abandoned to compel use of the quota, the IMSS has a shortage of doctors, medicines, hospital beds and all, to encourage private hospitals in the case of education malpaga to teachers, it neglected schools to support private education. What has been done in the case of PEMEX and CFE? So easily, given the large protest demonstrations in defence of public services, the government has reiterated that these institutions representing the national heritage is not privatized, but the oil and electric power several years ago to be privatized by parties , through concessions to entrepreneurs to set up new businesses".