Skip to comments.Pemex's woes may clear way for Brazil to help
Posted on 04/02/2008 11:28:28 AM PDT by thackney
Mexico's leader sees potential in progress of Petrobras
Guillermo Najera, a 42-year-old machine operator at Mexican state-controlled oil company Petróleos Mexicanos, gets paid to do nothing all day. Pemex management can't fire the union worker or transfer him from the ammonia plant in Ciudad Camargo, where he still shows up for work even though the plant stopped production in 2002.
"We don't have anything else to do except keep our areas clean," Najera says as he and dozens of other idle workers enter the gates of the plant for the 7 a.m. shift. "I want to go back to work."
Pemex's lack of control over its 110,000 union workers is just one symptom of a deeper malaise at Mexico's largest company. But help from Brazil could be on the horizon.
Pemex, which produces more crude oil every year than Exxon Mobil Corp., suffers from too little investment, high taxes, laws that forbid competition, corruption and corroding and exploding pipelines. An accident at an offshore platform killed 21 in October.
Falling production The Pemex crisis that critics have warned about for the past decade has arrived: Production at the company's largest oil field, Cantarell, fell 18 percent last year, and Pemex has little petroleum lined up to replace it. Yet the government of President Felipe Calderon finds itself unable to act to prevent what could be a disaster for both Pemex and the government, whose budget relies heavily on Pemex sales.
The price of oil, which jumped 57 percent last year, has kept revenue at the oil giant from falling, masking a production decline, massive inefficiency and overstaffing.
In a report released Sunday, Pemex and the Mexican Energy Ministry said the oil company must work with outside firms to boost sagging production and gain access to better equipment.
The Mexican Energy Ministry estimates 30 billion barrels of oil and gas lie below the deep water on the Mexican side of the Gulf of Mexico.
Yet it's unclear whether Pemex has the technology, money or competence to drill successfully in waters as deep as 10,000 feet.
Calderon wants Pemex to have more autonomy from the government and the right to form partnerships with other companies to gain access to deep-water drilling technology.
May need imports Production at Pemex, the world's third-largest oil producer, began to fall in 2005 and in 2007 averaged 3.08 million barrels a day.
Mexico may have to import light crude less viscous oil used to make gasoline for its refineries by 2011 if Pemex is left unchanged, Energy Minister Georgina Kessel said in a Dec. 11 report.
What's bad for Pemex is bad for Mexico's economy. Pemex last year paid the government taxes of $62.5 billion a full 60 percent of its sales. Pemex funds about 40 percent of federal spending.
Only rising oil prices have prevented Mexico from falling into a budget crisis, which could ruin its three-year record of balanced budgets, stable exchange and interest rates and a stock market that rose fourfold in the past five years.
Money for exploration Mexican lawmakers have finally recognized the urgent need to give Pemex enough money for exploration and capital improvements.
They've reduced Pemex's tribute to the state twice in the past two years, giving the company $18 billion this year to spend on exploration, the highest amount ever.
What lawmakers are unwilling to change is the essentially political nature of Pemex's operation.
Under the federal constitution, the state has the exclusive right to process and distribute oil and natural gas.
Calderon has exhorted Congress to follow the example of Brazil's Petroleo Brasileiro, a state-controlled company that has sold shares publicly.
"We don't have much time," Calderon says. "We have to decide this."
Petrobras is eager to help. Before Brazil opened its oil industry to competition, Petrobras was inefficient and had little incentive to grow, says Samir Awad, manager of Petrobras' operations in the Americas, Africa and Eurasia.
The company now has a market capitalization of $235 billion and has more than doubled daily oil production to 1.92 million barrels from 869,000 in 1997 by drilling off the coasts of Algeria and Nigeria and in an area of the Gulf of Mexico controlled by the U.S.
Brazilian President Luiz Inacio Lula da Silva says he told Calderon in a private conversation last week that Pemex and Petrobras should create a joint company to explore new areas in the Gulf of Mexico.
Or any other commercial venture.
There is no problem at all. When PEMEX goes dry the workers will come up here and the stupid American taxpayer will take care of them.
Sure we’ll whine a bit but take to the streets in protest, never! Not us, the ones who pay the friggin bills are too busy working.
I believe that Calderon, the current Mexican president, was in Fox’s cabinet as the Energy Minister, in charge of Pemex.
Pres. Cardenas nationalized oil in Mexico several decades ago, in the 30s I believe.
He is very popular still in Mexico, with streets named after him in just bout every town.
He did it to keep the Yanqui gringos from exploiting the masses (publicly) and to benefit a clique (the real reason).
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