The list of the oil monopoly’s tales of terror is seemingly endless.

It is also beyond human comprehension. For example, over a decade ago, a powerful Guadalajara businessman with good connections at Pemex persuaded someone at the state-owned company to give an exclusive contract to supply the entire gas station network, then comprised by about 7,500 units, with engine oil and other lubricants.

This means that Bardahl, Shell, Mobil, Esso and other reputable brands were replaced with a dubious brand called Akron, produced by MexLub, and that for over a decade, Mexican motorists have had only one choice, and a crappy one at that, at the nation’s now more than 9,000 filling stations.

The MexLub-Pemex partnership is so shady that MexLub has not furnished operating results for over seven years, as required by law since public monies are involved in the majority Pemex stake. But despite the clearly fraudulent nature of the partnership, no one at Pemex, at the federal government or in Congress seems to care one way or the other.

In most oil-producing nations (except maybe Venezuela and Nigeria), the scandals that Pemex generates would be subject to in-depth inquiries. The latest at Pemex, as reported recently, is the case of Global Drilling Fluids de México, a company owned by Alfredo Coppel Salcido, a cousin of Pemex boss José Francisco Suárez Coppel.

Global Drilling has won 78% of the public bidding conducted for marine projects by Pemex Exploration and Production (PEP), one of the firm’s three main operating arms. This month, PEP is conducting another public bid for a marine project, and indications are that Global drilling will win again to raise its overall share to over 81%, indicating a clear conflict of interest.

Unconfirmed reports say the federal government, through its in-house watchdog, the Public Function Secretariat, is conducting a probe of Global Drilling’s overwhelming share of PEP projects. The downside, however, is that the federal agency is sometimes used as a smokescreen to cover up corruption higher up the political ladder.

The Pemex infrastructure is obsolete.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, in the next several days, an offshore project in favor of Global Drilling, created in 1993.

Global Drilling’s dominant presence in PEP projects would be easy to understand if it was the only company in the offshore services 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.

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