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Calderon seeks an overhaul of Mexico's oil firm

April 09, 2008|Hector Tobar | Times Staff Writer

MEXICO CITY — President Felipe Calderon on Tuesday called for a sweeping modernization of Mexico's state-owned oil company, outlining a series of reforms that would allow private firms to assume a greater role in the petroleum industry.

"We must act now," Calderon said in a televised address timed to coincide with the formal presentation of his initiative to the Senate. "Time and our oil are running out."

The reserves of Pemex, as the oil company is known, could disappear in a decade, officials say. Calderon said Mexico doesn't have the resources to undertake expensive deep-water drilling on its own, and contracts with private companies are essential to the survival of Pemex, whose massive revenue is the lifeblood of Mexico's government.

The proposals announced Tuesday, finally laid out in detail after weeks of speculation, amounted to Calderon's biggest political gamble since taking office in 2006.

The Mexican Constitution forbids direct foreign investment in the oil industry or private ownership of it. The country nationalized the industry in 1938, after expropriating U.S. and European companies. Public ownership of the country's most lucrative natural resource remains a highly emotional issue.

In response to Calderon's initiative, leaders of the leftist Democratic Revolution Party, known as the PRD, announced that they would launch a massive campaign of civil disobedience against the "privatization" of Pemex.

Claudia Sheinbaum, a top aide to PRD leader Andres Manuel Lopez Obrador, said 10,000 female members of a PRD "resistance brigade" would take to the streets today. In his address, Calderon insisted that Pemex would not be privatized. "Our oil is, and will continue to be, the property of all the Mexican people," he said. "Our aim is to make Pemex stronger."

In an official evaluation of the oil industry released in March, Mexico's energy secretary said independent analyses showed that Pemex's petroleum reserves had fallen 27% between 2002 and 2007.

Pemex oil pays for a host of social programs and public works projects. Last year, Pemex generated $104.5 billion in revenue, half of which went to the government. The company is the nation's largest taxpayer.

After paying salaries and other costs, Pemex was left with a loss of $1.5 billion.

Under the proposals announced Tuesday, Pemex would be granted greater control over its finances and greater freedom to sign contracts with private companies.

Mexicans would be able to buy "citizen bonds" in Pemex, he said. And the company would be allowed to make alliances with outside experts in the deep-water drilling necessary to expand the country's oil reserves.

Calderon said his proposals would not modify the constitution, but would make fundamental changes to administrative laws.

But Lopez Obrador said Calderon's proposal amounted to a back-door privatization of Pemex.

"That's how they privatized the electric utilities," Lopez Obrador said. "And now 35% of the industry is owned by foreigners."


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