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 Business News | January 2008 
Mexico's PRI Backs Private Investment in Oil Industry
 Adriana Lopez Caraveo & Andres R. Martinez - Bloomberg
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Mexico's largest opposition party will back a yet-to-be-disclosed plan for opening the state oil monopoly to outside investment in deep-water drilling and exploration as well as in pipelines and refining.
The Institutional Revolutionary Party will support President Felipe Calderon's goal of allowing outside investment in some areas of the country's oil business, easing a 69-year- old policy of exclusive state control to help reverse the country's declining output, Senator Rogelio Rueda said.
"We haven't made the necessary investment in Pemex," Rueda said in a telephone interview today in Mexico City, referring to state company Petroleos Mexicanos. "We are looking at the possibility that somehow private investment can satisfy that, whether it is domestic or foreign."
Pemex needs help from outside companies to explore and produce crude from deposits in waters deeper than 5,000 feet and halt a decline in reserves and output, according to a government study. Crude output may fall to 2.1 million barrels a day in 2016 from 3.1 million today without deep-water production, the study says.
The party, known as the PRI, is against changing the constitution, which in 1938 nationalized most aspects of the oil industry. It also doesn't want to force Pemex to give up any of its current businesses, Rueda said.
Crude output from the Gulf of Mexico's Cantarell field, the third-largest oil deposit in the world, declined by 23 percent in November and is expected to fall even more.
Replacement Goal
Energy Minister Georgina Kessel has set a goal of raising the rate of replacement of proven oil reserves to 100 percent by 2013 from an estimated 50 percent last year.
Private investment in joint ventures with Pemex may be the only way Mexico can get the capital it needs to find and tap oil in deep water, said Rueda, a member of the Senate Energy Committee. The committee is working on a confidential proposal that may be presented to the rest of Congress in February.
The investment would also help wean the government off of oil profits, which account for about 40 percent of Mexico's revenue.
"What we want in the PRI is for this country to work," Emilio Gamboa, head of the PRI in Congress, said on Radio Formula today, expressing his support for private investment. "We want to raise the standard of living in this country."
Calderon, who leads a minority government, won backing from the PRI last year to cut pensions and raise taxes. In alliance with the PRI, Calderon's National Action Party can move legislation through both houses of Mexico's Congress.
The Party of the Democratic Revolution, the second-largest opposition party, says it opposes any foreign or private investment. One of its leaders, Andres Manuel Lopez Obrador, vowed street demonstrations in coming months to protest the proposal.
To contact the reporter on this story: Adriana Lopez Caraveo in Mexico City at adrianalopez(at)bloomberg.net |
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