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 Business News | February 2006 
Cuban Dispute Harms Oil Industry Plan, Mexican Minister Says
 Bloomberg
| | The Mexican Movement of Solidarity with Cuba protest in front of the Sheraton Hotel in Mexico City, Tuesday, Feb. 7, 2006. The hotel could be fined or even closed for expelling Cuban guests at the behest of the U.S. Treasury Department, Mexican officials said. (AP/Marco Ugarte) |
The expulsion of Cubans from a Mexico City hotel because of a U.S. sanctions law stirred controversy that makes it harder to build support for opening Mexico's oil and gas industry to international investment, said Mexican Energy Minister Fernando Canales Clariond.
A group of Cuban government officials and businessmen were asked on Feb. 3 to leave the Sheraton Maria Isabel hotel, where they were meeting U.S. oil executives. The hotel, owned by Starwood Hotels & Resorts Worldwide Inc. of White Plains, New York, was seeking to comply with the U.S. law that prohibits American companies from doing business with Cuba.
Canales, who is lobbying to overturn prohibitions on foreign investment in Mexico's oil industry, said the incident stirred concern about erosion of Mexican sovereignty and meddling by the U.S. The arguments against foreign investment "are not technical or economical, they are emotional," he said in an interview at the Cambridge Energy Research Associates conference in Houston.
"It is possible that before Aug. 31, which is the last day of the present Congress, that we'll have some changes in the legal framework in order to enable some measure of international participation," Canales said. Opening the industry to outside investment "is one of the most important issues in the Mexican economic agenda."
Mexico may fine the hotel up to 4.9 million pesos ($466,000) because of the incident, Foreign Minister Luis Ernesto Derbez said, earlier this week. The U.S. State Department said that the hotel was subject to the Trading with the Enemy Act because it was a U.S. company.
Mexico's Constitution
The Mexican constitution currently restricts foreign investment in much of the nation's energy industry as a means to ensure that resources are controlled by the Mexican people. The $15 billion that state-owned Petroleos Mexicanos invests is only half of what should be spent, he said, and opportunities to increase production are being lost.
Areas that could be opened to private investment in this term of Congress include oil and oil-products pipelines, storage facilities, refineries and electricity cogeneration, Canales said. Investment is allowed in electricity and natural-gas pipelines.
The minister also said Mexico needs to open its offshore industry to investors. Expanding production means tapping offshore fields that are deeper under the Gulf of Mexico. Pemex is five or six years away from developing the needed technology to do that, he said.
Jim Kennett in Houston at jkennett@bloomberg.net. |
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