MEXICO CITY – Mexico’s incoming president has a great opportunity to revive state oil company Petroleos Mexicanos if he chooses to adopt the Chinese model, the head of the country’s oil regulator said Thursday.
“It’s time to transform Pemex so it’s a company in every sense of the word,” Juan Carlos Zepeda, the president commissioner of Mexico’s National Hydrocarbons Commission (CNH), said at a conference organized in Mexico City by market-research and consulting firm Oxford Business Group to present its new book titled “The Report: Mexico 2018.”
President-elect Andres Manuel Lopez Obrador, who will take office on Dec. 1, has pledged to renovate six refineries and build a new one, as well as promote hydroelectric power plants, in a bid to give a boost to the sector and lower energy prices.
Lopez Obrador’s promises to reform state energy companies represent a “great opportunity to transform Pemex and the Comision Federal de Electriciad,” the state-run electric utility, Zepeda said.
Pemex, a company whose production has fallen steadily over the past 14 years and has recently implemented an austerity drive to address severe financial woes stemming from lower oil prices and an energy-sector overhaul, must adopt the Chinese model if it is to get back on a solid footing, the head of the CNH, a government agency with technical and budgetary autonomy, said Thursday.
“The Chinese model would work very well for Mexico and Pemex,” which would remain a 100-percent state-owned company but be allowed to have majority state-owned subsidiaries that raise capital in financial markets, Zepeda said.
That would allow Pemex to reverse a long slide in its oil output, which has fallen from a peak of 3.4 million barrels per day in 2004 to 1.95 million bpd in 2017, he added.
Zepeda said this reform would be very nationalist and in line with the philosophy of the leftist Lopez Obrador because it would make the company more competitive.
He also said it was “absurd” that the oil-producing country imports 75 percent of the gasoline it consumes and said of the proposed rehabilitation of refineries and the construction of at least one new one that that plan was “something desirable” and “economically viable.”
Lopez Obrador also has announced that he will review all oil contracts signed following the approval of a landmark 2013 energy-sector overhaul that ended Pemex’s decades-old exploration and production monopoly and has led to investment commitments totaling some $200 billion thus far.