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Mexican Opposition Floats Competing Energy Reform Plan


Mexican President Enrique Peña Nieto isn’t the only one with a plan to reform Pemex, the country’s bloated, mismanaged oil and gas monopoly. His proposal, which involves reforms to the country’s constitution that would allow foreign firms access to Mexican hydrocarbons via profit-sharing agreements, will have the two-thirds majority it would need to pass the legislature if he can mobilize his own party, the PRI, and the more conservative PAN. But the leftist PRD, a member of Peña Nieto’s Pact for Mexico that has successfully pushed through education and telecom reforms, won’t play ball with the President on energy. Instead, it is putting its own reform plan forward, one that won’t allow foreign firms any access to Mexican oil or gas. Reuters reports:

The PRD proposal would overhaul the company’s administration by removing most government officials as well as all union officials who currently serve on the company’s board….

The proposal would also gradually lower the company’s tax burden by 9 percent to 62.5 percent by 2018, freeing up more resources to invest in exploration and production activities.

No one expected the PRD to assent to any reform that could be seen as giving up Mexico’s ownership of its oil and gas reserves. The country celebrates March 18th as a national holiday, the day in 1938 when the country expropriated its oil. But even cultural pride can’t blind the PRD to the gross inefficiencies that plague Pemex, or the obstacles to tapping into the off-shore and shale reserves that are more technically difficult to reach. Replacing government bureaucrats with leaders actually familiar with how to succeed in the oil and gas industry is a necessary step if Mexico hopes to join the US in making the shale boom a North American phenomenon.

Peña Nieto’s reforms go further than the PRD’s, and they’re a better choice for Mexico if it wants to become, as Pemex’s CEO put it, the “new Middle East.” The majority of Mexicans seem to support the more aggressive reform; Reuters reports that in a recent poll “58 percent of adults favor constitutional changes to allow private companies to extract oil.” Still, it’s significant that even the opposition party is acknowledging the need for change.

[Oil barrels image and Mexican Flag image courtesy of Shutterstock]

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  • Jacksonian_Libertarian

    Whatever they do if Pemex still remains a monopoly, it will still be the same bloated mismanaged oil and gas monopoly.
    If they were really serious about reform, they would chop up Pemex into pieces, and sell it all off to the highest bidder.

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