President Felipe Calderon, Center-Left Opposition Parties Differ on Energy Policy, State-Run Oil Company Pemex

SourceMex Economic News & Analysis on Mexico, April 7, 2010 | Go to article overview
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President Felipe Calderon, Center-Left Opposition Parties Differ on Energy Policy, State-Run Oil Company Pemex


President Felipe Calderon's administration and the opposition parties have different ways of observing the 72nd anniversary of the expropriation of Mexico's oil industry, which many also mark as the birth of the state-run oil company PEMEX. In a ceremony marking the milestone decision by President Lazaro Cardenas (1934-1940), President Felipe Calderon and members of his administration used the occasion to announce the discovery of new reserves in the Gulf of Mexico and to present a cautiously optimistic view of the future. This is in contrast to the center-left opposition parties, which are pushing for a stronger PEMEX. They warned that Mexico has followed erroneous policies in the past that have led to a crisis in the Mexican oil industry. At the center of controversy is the Calderon administration's decision to pursue performance-based exploration contracts with foreign companies. Even though Congress approved such contracts in 2008, critics argue that the door has been left open for foreign companies to earn profits from Mexican oil, which would violate the Constitution.

Calderon marks PEMEX anniversary at site of new refinery

Calderon marked the PEMEX anniversary with a ceremony at the site of the company's planned refinery in Tula, Hidalgo state. Construction of the refinery, which would be the first such facility developed in Mexico in three decades, is scheduled for completion in 2015 (see SourceMex, 2009-04-22). PEMEX officials said that the design work and environmental and security reviews had been concluded and that construction would begin in April 2011.

The Mexican president said the government plans to devote about 5 billion pesos (US$408 million) to preparatory work on the new Refineria Bicentenario, which will have the capacity to refine about 250,000 barrels per day when it comes online in 2015. The government has yet to announce details of a bidding process by which private companies would be hired to construct the facility.

Calderon said PEMEX is planning other investments in the near future, including a new petrochemical complex in Veracruz state that will primarily produce ethylene. The plant, which will be constructed by a partnership between Brazilian petrochemical consortium Braskem and Mexico's Grupo Idesa, will cost US$2.5 billion. The Mexican president first announced this project at the Latin American regional summit in Quintana Roo state in March (see SourceMex, 2010-03-03). At the press conference on the anniversary of the nationalization of Mexico's oil resources, he announced that the project would create as many as 8,000 jobs during the construction phase and up to 3,000 permanent jobs.

The Calderon administration also used the anniversary to announce that PEMEX had found deposits of up to 2 billion barrels of super-light and super-heavy oil in the Ayatzil-Tekel and Tsimin-Xux sections of Chicontepec field, in the shallow waters of the Gulf of Mexico. The oil, discovered in the last two years, would not make a huge difference in Mexico's dwindling reserves of about 43.6 billion barrels. But administration sources say the additional reserves will boost PEMEX's reserve-replacement ratio, which reached 77% in 2009, compared with 72% in 2008. The ratio measures the ability of an oil company to keep reserves from falling as wells draw down crude and natural gas from established fields. A 100% rate would mean new deposits are matching the pace of production.

Administration sources said reserves have increased steadily during Calderon's tenure in office, thanks in part to the government's commitment to invest about US$22 billion annually for exploration. This investment, they said, has allowed the company to contain a drop in crude production and keep output stable at 2.6 million bpd.

In the current fiscal year, the Calderon government has given PEMEX a budget of 376 billion pesos (US$30 billion), of which 70% will be used for investment, "a record-high investment total for the company.

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