Without energy reform, Mexico will need more than half a century to reach U.S. output

Guadalajara -
Mexico has plenty of oil and gas, but most of it is laying in the ground unexploited, making the country a net importer of natural gas. That was the conclusion in this McClatchy news service report filed two days ago.

Without the prompt enactment of energy reforms, it will take Mexico at least 60 years to reach U.S. production levels, the head of the country's department of energy noted this week. "By then it will be too late," said secretary Pedro Joaquín Coldwell.

Coldwell told a conference of industrial executives that one of the reasons Mexico so lags in energy production is that the entire sector is state controlled. Under articles 27 and 28 of Mexico's federal constitution, the government has a monopoly on natural resources and energy production. In 1938 the country nationalized all hydrocarbon production, kicked out foreign producers and created Petróleos Mexicanos, or PEMEX. Private entities, foreign or domestic, are prohibited from participation in the industry under current law.

In the United States, secretary Coldwell told his audience, at least 80 private enterprises participate in the extraction of hydrocarbons, because of the risks and enormous capital investment required.

As a result, Coldwell said, in the last year alone the U.S. opened 137 new wells in the Gulf of Mexico, extracting about a million barrels of crude oil every day. Mexico, in sharp contrast, dug just six wells.

The secretary told the conference that without major private investment in PEMEX, nothing can be expected to change in the years ahead. But he emphasized that the huge entity will remain firmly under government legal control.

"The objective of the proposed amendments is to guarantee national sovereignty over hydrocarbon production, and to maintain the industry in the hands of the State. But the risk of exploration coupled with the unpredictability of yields in any particular hydrocarbon field would be shared with private investors, whose capital would be utilized to acquire the latest technology necessary for discovery and extraction," said Coldwell.

The pending legal changes, which are being advanced by the PRI government of president Enrique Peña Nieto, face stiff opposition from Mexico's Left, largely based on national sovereignty grounds and appeals to xenophobic emotions.

Mexico's senate will soon take up the controversial energy reforms. Legislative leaders have invited leading spokesmen for the opposition to appear before congress next week to present their views, including Andrés Manuel López Obrador, head of the far left MORENA party; Cuauhtémoc Cárdenas, a founder of the Democratic Revolution Party (PRD) and a leading voice of Mexico's left wing; and Marcelo Ebrard, a former PRD governor of the Federal District who is an almost certain candidate for president in 2018. It is unclear whether any of the men will accept the invitation.

Sept. 21 - López Obrador announced today he will not appear before the senate to participate in the energy forum, "because it's a farce, it's already a done deal." Cuauhtémoc Cárdenas will attend, however, as will Ebrard. The senate could vote on the constitutional amendments as early as Oct. 15.

Nov. 3 - Forbes praises Enrique Peña Nieto's "courageous" energy policy
Oct. 7 - López Obrador calls for campaign of protest and civil disobedience over PEMEX reforms
Sept. 23 - Energy reform debate opens in Mexican Senate, with grave warnings of "foreign takeover" of PEMEX
Sept. 21 - "The fix is in" on energy reform, says AMLO
Sept. 19 - Mexico's Left is determined to shackle the nation to the past
Sept. 18 - Mexico is in full recession, and the PEMEX pension fund is broke

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