Over the weekend, President Felipe Calderón delivered a bombshell of sorts during a visit to New York, where he was presented with an environmental protection award known as Earth Champions 2010.
In an interview with Bloomberg Television, the president, whose administration in the past few years has been bombarded with dire comparisons between Mexicos failed oil monopoly Pemex and the Brazilian Petrobras huge success story, said he wants to follow the Petrobras model of partial privatization.
It was a bombshell of sorts because in Mexico, Calderón had never acknowledged such a momentous change. The idea, he said, is to finetune the proposal so that it is presented to Congress when the Legislature convenes in September.
Alas, it may all be for naught, or rather, it may all be simply an electoral maneuver. The likelihood is far less than slim that Congress might tackle a Pemex reform at this stage of the game, since the 2012 presidential election will be foremost in the legislators minds this fall.
Lets face it, this Legislature is more bogged down in partisan squabbles than any other in recent memory. At the close of the last session April 30, not a single major bill was approved, and that included labor and political reforms.
Three years ago, Calderón sought to implement an in-depth reform at Pemex, but the bill was badly patched up in Congress and the only visible result of the proposal was to allow Pemex to issue citizen bonds , enabling private investors to cash in on attractive yields but without acquiring any type of equity in the monopoly.
In New York, Calderón provided a good example of how swiftly things move in the National Palace, as he insisted on his governments plans to sell bonds issued by Pemex.
The measure was approved three years ago, and still no bonds. He also pledged to renew a drive in Congress to give the state-run oil producer the tools it needs to boost output.
But, to be on the politically correct side, he made it clear that the government has no plans to sell shares in Pemex, something that would require congressional approval anyhow. And, since wishful thinking comes cheap, he noted that that a share sale for Pemex could be an alternative as part of his not-too-successful drive to modernize the 73-year old company.
The legislation he claims hell present to Congress in September would seek to remake Pemex along the lines of Brazils Petrobras, or perhaps taking a cue from Norways Statoil.
My plan is to try another legal reform in order to modernize Pemex in a way similar to what Petrobras did 10 years ago, Calderón told Bloomberg. Its going to be difficult, but I think we are moving the perception of public opinion of how important it is to modernize the enterprise.
Actually, nobody disputes the fact that Pemex needs modernizing, nobody, that is, except for our useless legislators, of all persuasions, who seem to think its their patriotic duty to defend state ownership of Pemex to the death, even though the company itself, with a negative net worth, is on the brink of total collapse.
Pemex, which for the time being remains Latin Americas largest oil producer, is offering foreign oil companies performance-based contracts as it seeks technologies to extract oil from mature fields and stem six straight years of declines. The problem is that the scheme has not been too successful because requirements are too strict and bureaucratic red tape is abundant.
The monopoly claims it will earmark US$23 billion this year to boost output. Production fell to 2.576 million barrels a day in 2010, from a daily average of 3.4 million when Calderón was energy secretary in 2004.
Reflecting the legislative stalemate, three years ago Calderón pushed through Congress a bill to allow Pemex to offer exploration and production contracts to private companies and to sell so-called citizen bonds to raise capital among the Mexican public.
The contracts were delayed several times after being challenged by some lawmakers in the Supreme Court, and opponents watered down another bill to promote more foreign investment in Mexicos oil industry.