Guadalajara -
Forbes magazine has praised the "courageous" energy reform proposals of Institutional Revolutionary Party president Enrique Peña Nieto, maintaining they constitute the "most significant change in Mexico’s economic policy in 100 years."
Forbes called the PRI president, who completes his first year in office on Dec. 1, the leader of a Mexican "oil revolution."
"Despite the drug war and immigration morass, America’s southern neighbor is on the cusp of its greatest economic transformation in a century, thanks to the courageous oil reforms of its new president, Enrique Peña Nieto," wrote Forbes in the Oct. 30 article, available now on its website and in print on Nov. 18.
Acknowledging Mexico's almost 84 month old drug war, with steady if not increasing casualties, economic growth forecasts which have been headed south all year and billions of dollars in damage left by unprecedented simultaneous hurricanes on both coasts in September, Forbes continued:
"Yet there is reason for hope. In the shadow of all this hardship a radical transformation of Mexico’s economy is on the horizon. Under the leadership of new President Enrique Peña Nieto, the country’s congress will by the end of this year almost certainly pass a constitutional amendment to open up its oil and natural gas sector to private investment. By this time in 2014 ExxonMobil, PetroChina and Norway’s Statoil could even have contracts in place to start exploring for Mexico’s untapped oil and gas bounty."
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 hydrocarbon production, kicked out foreign producers and created Petróleos Mexicanos, or PEMEX. Private entities, whether foreign or domestic, are prohibited from participation in the industry under current law.
Forbes quoted PEMEX CEO Emilio Lozoya, who said the passage of energy reforms is a certainty. The pending constitutional amendments "are more than a dream come true; they are long overdue."
The Forbes article continues here, reviewing and analyzing the history of Mexican oil policy and explaining why the country so desperately needs the reforms, despite radical opposition from the political far Left and its leading spokesman, two time presidential candidate Manuel López Obrador.
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Key arguments in the Forbes story:
"Without reforms, much of Mexico’s estimated 30 billion barrels of oil and 500 trillion cubic feet of natural gas (about the same as Brazil) will simply remain locked in the ground. Pemex, despite being one of the world’s biggest oil companies, does not have sufficient technical expertise to explore and develop promising prospects in the deepwater Gulf of Mexico or in the tricky shale layers just south of the border from Texas’ booming Eagle Ford fields. What’s more, Pemex has virtually no hope of acquiring or borrowing such expertise under the status quo, which allows the company to enter into only service contracts.
"Big Oil companies like ExxonMobil or Chevron won’t even consider taking on the massive risks of drilling complex wells without a guaranteed cut of whatever oil and gas they find. And with Mexico relying on Pemex revenues to fund a third of the federal budget, Pemex is chronically starved of the capital it needs to develop the expertise to do it itself."
MGR reports on energy reform opposition
Oct. 7 - López Obrador calls for public protest and civil disobedience over pending PEMEX reforms
Sept. 23 - Energy reform debate opens in Mexican Senate; warnings of foreign takeover of PEMEX
Sept. 21 - Opinion: Andrés Manuel's vision for Mexico
Sept. 21 - "The fix is in" on energy reform, says AMLO: new laws "designed for foreign business"
Sept. 20 - Without energy reform, Mexico will need more than half a century to reach U.S. output
Sept. 19 - Opinion: Mexico's Left is determined to shackle the nation to the past
Oct. 31 - Not everybody likes energy policy reform, or thinks that Enrique Peña Nieto is a hero.
The "18th of March Brigade" is a reference to March 18, 1938 - the day foreign oil assets in Mexico were appropriated and the entire industry was nationalized by former president Lázaro Cárdenas
© MGRR 2013. All rights reserved. This article may be cited or briefly quoted with proper attribution or a hyperlink, but not reproduced without permission.
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