What next for Pemex?

2/9/2016 Forbes.com

By Duncan Wood, Director of the Mexico Institute

Pemex LogoThe news that Emilio Lozoya, CEO of Mexican National Oil Company Petroleos Mexicanos (Pemex) would be stepping down came as no great surprise to many observers of Mexican oil politics. The company has been in deep trouble for over a decade now and, although Lozoya only took over 3 years ago, he has been able to do little to stem the tide of bad news during his tenure at the top of the organization. From a high point in crude oil production in 2004 of 3.4 million barrels per day (bpd), Pemex now only produces around 2.2 million bpd, and that total is predicted to fall further in the coming months. Combined with the low oil price internationally, that means a lot less revenue for Pemex, but more importantly, less fiscal revenue for Lozoya’s political bosses in the government of President Enrique Peña Nieto. Mexico’s government has depended on oil for up to 35% of its revenue over the past decade, but with lower prices and lower production, that total has fallen closer to 20%, leaving a growing gap in the federal budget, that has been covered by cutting spending in infrastructure projects and government salaries and services.

The money problem afflicting Pemex has largely been caused by successive Mexican governments treating the NOC as a cash cow, and the truth is that the company has been milked to death. This year’s cuts in the Pemex budget and the calls for layoffs are only the latest manifestation of a long-running abuse of the company by the Mexican federal government. But the decline in Pemex and government revenues is only one part of the unholy trinity of problems that has been afflicting the NOC in recent years.

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Mexico Topples Oil Theft Ring, But Cartel Threat Lingers Over State Petroleum Company

08/08/14 Vice News

oil pipeline150Mexico has taken down a criminal ring dedicated to stealing oil from its state petroleum monopoly Pemex, authorities said on Wednesday night, part of efforts to clamp down on out-of-control oil thefts that have grown exponentially in recent years during the country’s drug war.

The federal attorney general’s office said five people were arrested in connection with a cell of oil thieves, after 14 search warrants were served in three regions of the country. Authorities seized ten properties, at least $20,000 dollars, and numerous tractors, trailers, firearms, luxury vehicles, and jewels.

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Immigration, Energy Reform & Protests – Weekly News Summary: June 21

Coffee by Flikr user samrevelThe 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.

Continue reading “Immigration, Energy Reform & Protests – Weekly News Summary: June 21”

Mexico’s President Pushes Reforms for State Oil Company Pemex

Enrique PeñaNieto 2Bloomberg, 6/20/2013

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.

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Mexico’s leftist opposition rallies against energy reforms

PRD logoReuters, 3/17/2013

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.

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Mexico’s Energy Reform Drawing Interest in Texas

energy - oil_rigThe 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.

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Mexico edges toward letting foreign oil firms invest in Pemex

Pemex LogoLos 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.

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