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  HOME | Mexico

Mexico’s President Aims for Renaissance of State Oil Company

MEXICO CITY – State oil company Petroleos Mexicanos (Pemex) needs lower taxes, more investment and an end to the fuel-theft racket that cost the firm $3.4 billion in 2018 if it is to survive, President Andres Manuel Lopez Obrador said Tuesday.

“Pemex is one of the oil companies that pays the most taxes in the world, so we will have to invest more because it’s one of the nation’s basic industries,” he said during his daily morning news conference.

Lopez Obrador said that the state company had been left without political support, something he described as “a deliberate plan to break” the company by previous administrations.

Pemex employees and company veterans have long complained that Mexican politicians treat the state oil monopoly as a cash cow and that political considerations take precedence over good business practice in the management of the huge company.

“It had never been the case that (Pemex) had to buy crude oil,” Lopez Obrador said, adding that the company expects to restore production to previous levels this year by tripling the number of active wells from 50 to 150.

The leader of the leftist Morena party criticized, once again, the energy sector overhaul carried out by his predecessor, Enrique Peña Nieto, who opened the sector to privatization after almost eight decades as a state monopoly.

“I’m waiting for them to apologize to us for the energy reform. They committed a serious error in trusting that awarding contracts in the so-called (bidding) rounds was going to bring investment,” the president said.

Stealing fuel from Pemex pipelines and re-selling it on the black market has become a major criminal enterprise in Mexico.

Since his Dec. 1, inauguration, Lopez Obrador has launched an all-out fight against the racket, deploying thousands of police and troops to increase the surveillance of pipelines.

The administration also adopted a change in Pemex’s method for shipping gasoline and diesel from refineries to urban distribution centers, opting to transport more fuel via tanker trucks instead of pipelines.

That modification has caused severe supply problems in at least 10 states and Mexico City and led to the closing of service stations and panic purchases.

The government announced last week the purchase of 671 additional tanker trucks in a bid to alleviate fuel shortages.

Lopez Obrador said Tuesday that the fight against fuel theft – an activity known as “huachicoleo” – is making good progress.

“If we continue (working) as we are now, we will save between 40 billion and 50 billion pesos ($2.63 billion to $3 billion) annually,” the president said.

 

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