Max Fisher argues that Mexico’s new plan to allow global oil giants like Exxon and Shell to invest in its state oil monopoly could “potentially revolutionize the Mexican oil and gas industry.” But not everyone is onboard:
Mexicans opposed to the reforms worry that it may be a step toward privatizing [state-owned firm] Pemex or the entire Mexican energy sector outright, something [President] Peña Nieto pledges not to do. John M. Ackerman, a prominent Mexican law professor and columnist aligned with the political opposition, argued that the proposal “exposes the gross ambition of big national and foreign companies to get themselves an even larger slice of the national wealth.” He disputed what he characterized as the pro-reform view that “greater ‘involvement’ by Exxon-Mobil and Halliburton will automatically benefit the Mexican people.” Ackerman’s view seems to be a common one among those opposed to the plan.
The Bloomberg editors, on the other hand, are excited:
Mexico has much more oil to find, but Pemex lacks the technology and knowledge to tap new and complex deepwater fields.
And because its finances and management are tightly controlled by the government, which relies on Pemex for about one-third of its revenue, it can’t make strategic investments. One analysis says that the money needed to exploit current opportunities is equivalent to 30 years of Pemex’s 2013 investment budget.
Passage of the reforms could unlock tens of billions in needed investment and lift Mexico’s annual growth by as much as two percentage points. A less-heralded but in some ways equally disruptive element of Pena Nieto’s proposal would break the electricity distribution monopoly of the state power company CFE, whose grip on power has left Mexicans with some of the highest electricity costs in the developed world.
The Economist is more pessimistic:
Whatever reforms the government announces, they will stop a long way short of privatising Pemex. It is so wrapped up in a myth of national sovereignty that even the energy minister, a champion of reform, insists that not a “single screw” will be sold. Reformists hope the government will at least let private firms work with Pemex to develop shale, deep-water and other challenging fields. But even this would require constitutional changes, and would face much resistance. Since Mexico has no significant private-sector oil industry, much of the investment would have to come from foreign firms, and for nationalists this would be hard to stomach.
Juan Carlos Hidalgo calls the proposed reforms “timid”:
Peña Nieto’s efforts to bring more private investment to Mexico’s oil industry should be commended. However, even if his energy reform is approved, Mexico will still have the most tightly state-run energy sector in the Americas (even more than Cuba and Venezuela). That, in itself, should indicate how much room for further reform will be needed.