Emilio Lozoya, the CEO of Pemex, isn’t hiding his enthusiasm for the future of the Mexican state-owned oil company. Lozoya gloated recently over a report that named Mexico the “new Middle East”. The Financial Times reports:
“You will have industrialisation in Mexico that didn’t exist before,” Mr Lozoya, chief executive of Pemex, the state-owned oil company, declares. “After all, we share the same geology as the USA.”
Mexico might share US geology, but it lacks an entrepreneurial energy industry. With no domestic competition, Pemex has had little incentive to innovate, and the results have been disastrous. Since 2004, Pemex has hired an additional 22,000 employees, yet production has fallen 23 percent. The company’s inefficient organizational structure is largely to blame, but there are signs that real reform is underway: Over the past two months, one third of Pemex’s upper management has been replaced, and the new CEO appears ready to push through further reforms and enjoys a close relationship with President Nieto, who has made reforming the stagnating Pemex a priority.
We’ll be watching for the details of these reforms emerge as the year goes on, and we hope that we won’t be alone. The tired narrative of Mexico as a drug-ridden, hyper-violent country has dominated media coverage of Mexico in recent years, but there’s plenty to be excited about when it comes to our neighbors to the south.
[Oil barrel image courtesy of Shutterstock]