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Mexico: historic change

Tuesday, August 20, 2013

Mexico's president, Enrique Peña Nieto, has proposed an energy reform that will open the nation's oil monopoly to private enterprise.

More than $10 billion a year of investment will flow in from companies such as Chevron, British Petroleum and Shell, he claims.

New capital and modern technology will let Mexico exploit oil fields, which currently are underproductive, says Peña.

With these changes, oil income will grow, compared to the current situation, in which output has been falling consistently since 2004.

The new approach would not let foreigners own Mexican oil resources – a sensitive issue for many people.

But foreigners could be partners on successful projects with state-owned Petroleos Mexicanos, Peña says.

Not all Mexicans agree.

The partnership-with-Pemex approach is a smokescreen, some say.

Peña’s real plan is a return to the bad old days of a century ago, when foreign companies exploited Mexican oil, paying off their friends in government, while leaving little in return for the rest of the country, they claim.

Environmentalists see new projects as sources of inevitable pollution.

For their part, foreign companies may not rush to invest billions of dollars in projects, in which they have no ownership rights.

On the other hand, Pemex needs a fresh approach.

Even with output falling by more than a third, the company still has the same labor force as a decade ago – the third largest in Latin America.

With new projects, Pemex personnel would be more productive.

The concept of a partnership with the oil company of a stable state such as Mexico, should be no less attractive to foreigners, than ownership rights in the troubled Niger River Delta.

For their part, environmentalists should ensure that any project involving a foreign company meets international standards.

As for a sell-out, Mexico today – unlike the nation of 1900 - has a vigorous opposition, and free media.

If these resources don’t help produce a reasonable result, Mexico has bigger problems than Pemex.