Editorial: Pemexican Wave Goodbye To A 75-year old NOC?
In 1938, President Lâzaro Cârdenas expropriated of all resources and facilities of foreign oil and gas operating companies in Mexico, creating the state-owned Petrôleos Mexicanos or Pemex. 75 years later, on the birthday of South America’s second largest enterprise by annual revenue, incumbent President Enrique Peòa Nieto pledged that the part-privatisation of this paraestatal would form part of his package of wide-ranging energy reform.
The importance of Pemex to Mexico’s economy cannot be understated. Employing more than 138,000 people countrywide, it is the world’s 8th largest hydrocarbon producer, outputting 3.6 billion barrels per day. On top of that, the organisation paid more than $62 billion in taxes to the Mexican exchequer last year, making up 30 per cent of total government income in 2012.
So why privatise now? Unlike South America’s largest enterprise by annual revenue, Petrobras, private investment in Pemex has been strictly regulated. With declining production of the supergiant Cantarell field, investment in expensive deepwater ventures in the Gulf of Mexico and development of the world’s 7th largest deposits of technically recoverable shale oil are seen as the future of hydrocarbons in Mexico. But this all costs money.
To keep its critical status in the top ten of oil producing nations, the ingress of private money seems ineluctable for Pemex. Let us hope that in part-privatising Pemex’s gains, Nieto keeps to his promise of contributing to the wellbeing and progress of the communities in which it operates.