June 21, 2013
The Mexico Institute’s “Weekly News Summary,” released every Friday afternoon summarizes the week’s most prominent Mexico headlines published in the English-language press, as well as the most engaging opinion pieces by Mexican columnists.
What the English-language press had to say…
This week, the nonpartisan Congressional Budget Office released a study that concluded the current Senate immigration bill would reduce the federal deficit by $150 billion during the first 10 years and by another $700 billion over the second decade. The Washington Post interpreted the report as yet further proof that immigrants are “strivers, and not burdens” on the American economy. In response to conservative opposition to reform, moderate Republican senators proposed doubling the number of Border Patrol agents to 40,000 – a ‘human fence’ between the U.S. and Mexico. According to The Christian Science Monitor, the compromise could give the bill enough momentum when it comes to a final vote in the Senate next week. The Economist, however, argued the border is already secure enough, and warned that further spending on fences and drones could do more harm than good.
President Enrique Peña Nieto said he is negotiating with political forces within Mexico to break the state monopoly over oil in order to boost economic growth and expects to have an energy reform bill ready by September. Political support within the framework of the Pacto por México, he said, should ensure the bill is approved by year’s end. Bloomberg and The Wall Street Journal reported widely on the subject.
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June 21, 2013
Petróleos Mexicanos, known as Pemex, has long been the third rail of Mexican politics. The state-owned company, originally based on oil fields seized from foreign owners over 70 years ago, has produced sizable government revenue and union jobs for hundreds of thousands of Mexicans. Foreign investment has been largely restricted.
But now Pemex’s main asset, the giant Cantarell offshore field, is shrinking fast. The company says it needs to boost annual investment by 46 percent, to $37 billion, to tap undeveloped shale-gas deposits and deep-water reserves. Without some private capital and expertise from abroad, Mexico risks becoming an importer in the next decade. Many of Mexico’s politicians and policymakers have known this for years. Yet Mexican nationalism, resistance from the unions, and the sheer size of the task of transforming Pemex have stood in the way.
March 18, 2013
Waving party flags and shouting their support, tens of thousands of leftist party members rallied on Sunday against government plans to overhaul Mexico’s energy sector, a preview of the tough road ahead for President Enrique Pena Nieto’s reform push. Organized by the leftist Party of the Democratic Revolution, or PRD, the rally took place on the eve of the 75th anniversary of the nationalization of the country’s oil industry, the historical pivot that gave birth to state oil monopoly Pemex.
Speakers denounced any move to privatize the government-run oil giant, even though Pena Nieto and other members of his centrist Institutional Revolutionary Party, or PRI, have consistently denied any plans to sell or privatize Pemex. “We are being loyal to this historical legacy that has given our oil riches to the nation and we are going to defend it with everything we’ve got,” said Jesus Zambrano, the PRD’s national president, to rousing applause.
March 7, 2013
The Texas Tribune, 3/6/2013
The Mexican ruling party’s recent decision to adopt a platform that could open up the country’s giant oil monopoly to private investment has caught the attention of some industry gurus in Texas, who say the move bodes well for U.S. business interests.
The Institutional Revolutionary Party, or PRI, remains adamant that the state-owned company, Petróleos Mexicanos, or PEMEX, will stay under state control. But the proposal, which requires legislative approval, could mean more oil is exported from Mexico to the U.S., and that Mexico might turn to Americans for guidance on how to increase production there.
March 5, 2013
Los Angeles Times, 3/4/2013
Mexico’s ruling party has taken a step toward opening its state oil company to outsiders, a move that could eventually allow U.S. oil firms to drill south of the border. In an important test of Mexican President Enrique Peña Nieto’s sway over resistant factions of his party, the Institutional Revolutionary Party has changed its bylaws to clear the way for changes at Petroleos Mexicanos, or Pemex.
Pemex, a symbol of nationalist pride, is the top source of tax revenue for the Mexican government. But its production of oil has been declining dramatically and the company is in dire need of outside expertise for deep-sea exploration. On Sunday, PRI, as the party is known, passed several changes that Peña Nieto needed for the reforms he promised as a hallmark of his administration. Chief and most difficult among them is opening the behemoth Pemex to private and foreign investment, long a taboo in this country.
February 28, 2013
Financial Times, 2/27/2013
Emilio Lozoya jumps to his feet and marches over to a wall cabinet in his 44th floor office at Pemex’s headquarters in Mexico City. “You see this?” the fresh-faced 38-year-old Harvard graduate, asks, holding up a glass vial with a pale liquid inside. “That’s pure gold. It’s as good as it gets.”
Mr Lozoya’s optimism is infectious as he contemplates the high-grade oil sample which he believes is emblematic of Mexico’s future. To ram home the point, he produces an investment bank report which describes the hemisphere as the world’s “new Middle East”. Shale gas production north of the border has already slashed energy costs in the US, setting the stage for a manufacturing resurgence few imagined only five years ago. Mr Lozoya believes the same is possible in Mexico.
February 20, 2013
Inter Press Service, 2/20/2013
Oil, the symbol of modern Mexico, is once again stirring up local political waters, with turbulent debates on the fate of the state-owned oil monopoly and conflicts over the privatisation of key economic and strategic areas. The leading issues of contention revolve around the reform of Mexico’s state oil company Pemex (Petróleos Mexicanos), pitting advocates of full state control, who call for only minor changes in the company’s administration, against proponents of opening the industry up to private capital in prospecting, crude refining, petrochemical and other activities.
“We have to get back to discussing these issues urgently, with a frank and open debate on the need to modernise, backed by solid arguments. Addressing safety, health, environmental and other practices in Pemex is a pressing matter,” Miriam Grunstein, a researcher with the state Economic Research and Teaching Centre, told IPS.
February 14, 2013
The Wall Street Journal, 2/13/2013
For decades, Mexico’s energy policy has largely boiled down to exporting oil for cash to fund state spending. Now the new government is negotiating with rival political parties to curb that practice and instead use state monopoly Petróleos Mexicanos to a different end: cheaper energy, said Pemex CEO Emilio Lozoya. In an interview with The Wall Street Journal, the 38-year-old chief said the administration of President Enrique Peña Nieto was striving to overhaul tax and energy laws this year that Mr. Lozoya said would result in cheaper energy for consumers and companies that could drive a more competitive economy.
Now, the Mexican government relies on Pemex, one of the world’s biggest oil firms, for 35% of government spending, leaving the company with little left over to invest in areas like natural gas. Private companies, meanwhile, are largely barred from investing thanks to Mexico’s nationalistic energy laws. The result is an energy-rich country where companies often pay higher prices for energy than elsewhere. Mexico has large reserves of natural gas, for instance. But since Pemex doesn’t invest enough in gas, the country imports gas from the U.S.—raising costs to Mexican firms as they try to compete with global players like China.
February 4, 2013
The search for the cause of a blast that destroyed three floors of a building at Petroleos Mexicanos’s headquarters and killed at least 34 people entered a fourth day, as investigators toiled ahead of a self-imposed deadline for finding an answer.
“In a few hours, a day or two, but no later,” we’ll have update on the certainty of the cause of the blast, Attorney General Jesus Murillo Karam, said Feb 1.
The nation’s deadliest explosion since a mine accident in 2006 comes as President Enrique Pena Nieto, who took office Dec. 1, plans to submit a bill to increase private investment in the energy industry and lower taxes on Pemex, the nation’s largest company by revenue and the world’s fourth-biggest crude producer.
October 5, 2012
Enrique Peña Nieto
President-elect Enrique Pena Nieto’s team is looking at ways to open up Mexico’s energy industry that wouldn’t require changes to the constitution, a top economic adviser said.
Pena Nieto wants to break state-owned Petroleos Mexicanos’s monopoly on refining and exploration and is considering legislation that wouldn’t involve the two-thirds congressional majority needed for constitutional changes, Ildefonso Guajardo said. Pemex, as the company is known, is struggling to reverse seven years of production declines that have cut output 25 percent from a peak of 3.4 million barrels a day in 2004.