Everywhere you look when you put the magnifying glass to the oil monopoly, Pemex, terror sprouts. The so-called company is, to put it bluntly, a microcosm of the country’s dysfunctionality, or maybe it would be more accurate to say that the country is dysfunctional because of Pemex.

Take, for example, fuel theft. Last week, Pemex boss José Francisco Suárez Coppel acknowledged that in the first quarter, pipelines carrying refined product were milked to the tune of 3.3 billion pesos, more than the 2010 grand total. Regardless of who does the milking, the point is that authorities and the firm itself seem powerless to stop it.

The Pemex infrastructure is obsolete. Output is lagging because major oilwells are on the decline. The untouchable workers’ union is an unending source of corruption, and the firm will never lift its head above water when it has to pay 67 percent of revenues in taxes.

On the other hand, the firm boosted its payroll by 11 percent in the last two years to more than 150,000, which would not be so bad except for the fact that production is dwindling and its net worth is in the red.

Pemex could well be a boon to the economy if only it had a clear-cut scheme for giving out contracts to private companies, something it tries to do but can’t. Rather than allowing contractors to create jobs, the new Pemex law only added layers of bureaucracy, and the result is that literally thousands of private contractors keep waiting for the smoke to clear before they can get their hands on a deal.

There are numerous contracts pending on clean diesel, offshore platforms, storage terminals, new ducts, expansion of refining facilities, and many others. The current administration’s biggest project by far, a new US$10-billion refinery, will not get off the ground, among other things because it would have been cheaper to acquire three existing refineries in Texas than to built a costly white elephant.

Conflicts of interest are another tale of horror. Pemex is believed to be about to greenlight an offshore project in favor of Global Drilling Fluids de México, a company created in 1993 and chaired by Suárez Coppel’s cousin, Alfredo Coppel Salcido.

It seems odd that the Felipe Calderón administration’s own watchdog, Public Function Secretary Salvador Vega Casillas, has not deemed it pertinent to look into the fact that Global Drilling already boasts 78 percent of all contracts awarded by one of Pemex’s three main divisions, Pemex Exploration and Production (PEP).

Such a dominant presence would be easy to understand if it was the only company in the offshore drilling business, but the fact is there are another 10 or so major firms, including some international outfits that have global expertise, but somehow, Global Drilling almost always beats them out. Some of them are thinking of filing an international complaint.

With no regulator in sight, and with plenty of evidence that the Pemex boss’ cousin practically owns PEP public auctions, companies like Halliburton, M.I. Drilling Fluids, Dowell Schumberger, Qmax, Baker Hughes de México and others are ready to prove that PEP auctions have been rigged in favor of Global Drilling Fluids, which would spark yet another international scandal for Pemex, Suárez Coppel and President Calderón.

As part of this tale of terror, it’s worth recalling that before Suárez Coppel became CEO of Pemex, his cousin’s Global Drilling was suspended as a Pemex contractor because it failed to fulfill commitments on project costs and times of delivery. Oil industry experts do not understand how it was that Global won three out of four deals auctioned off in 2010, for a total of nearly one billion pesos. The other was secured by Halliburton.