to remarks by: José Alberro,
Michael J. Economides, Sandy
Gift from the Devil?
Felch, Graduate School of Journalism
Mexico privatize its sacrosanct petroleum industry?
The question has come to the fore once again, thanks
to the threat of war in the Middle East, recent talk
of increased Mexican production, and President Vicente
Fox's lurking campaign promise to reform Mexico's
the thought of privatizing PEMEX, Mexico's national
petroleum company, cannot be raised without also
raising the historical shadow that has accompanied
it since birth, that of Lazaro Cardenas.
the PRI's founding father, nationalized Mexico's
oil industry in a defiant move against foreign companies
in 1938. In the words of Daniel Yergin, who chronicles
the history of the petroleum industry in his book The
Prize, nationalization was "a great symbolic
and passionate act of resistance to foreign control,
which would become central to the spirit of nationalism
that tied the country together."
that glue still binds, and the Mexican voter may
rule out the privatization of PEMEX, which, according
to some analysts, Fox favors. This was the basis
of a lively conversation between a visiting journalist,
a well-known petroleum engineering professor and
a former Pemex CEO held at the Center for Latin American
Studies on September 12.
Tolan, a veteran journalist who has covered petroleum
and natural resource issues, is teaching a class
on the collision of politics and petroleum in Latin
America this fall at UC Berkeley. He was joined in
conversation by Michael Economides, professor of
Engineering at the University of Houston and a well-known
energy analyst, and Jose Alberro, former CEO of PEMEX
Gas y Petroquimica Basica and currently a director
of LECG, an economic consulting firm.
discussion, titled "The Politics of Petroleum and
the Future of the US-Mexican Relationship," was the
first in a series of events that will focus on the
evolving relationship between Mexico and the United
José Alberro, former
CEO of Pemex Gas y Petroquímica Básica,
explains the relationship between oil, Pemex,
and petroleros (oil workers and their
unions) in modern Mexico.
question of privatization is a complex, technical
one, and should not be treated simply, Alberro said.
He readily admits that PEMEX suffers for corruption
and gross inefficiencies. "An integrated monopoly,
like PEMEX, is the surest recipe for inefficiency," he
said. But, citing the recent corruption scandal involving
Enron, "to go from a nationalized corrupt company
to a private, foreign corrupt company is not a good
debate in Mexico is often framed in "stubborn, myopic,
and irrational" arguments, Alberro said. Oil's symbolic
value in Mexico has taken on larger proportions than
its economic value. Mexico's biggest challenge, according
to Alberro, is to create "a non-ideological solution."
professor of engineering at the University
of Houston, describes the future of oil
production in Latin America, especially
pointing out the pivotal role of Venezuela.
a solution, Economides argued, an apertura for
foreign oil companies, will come from the semi-privatization
of Mexico's energy sector. While PEMEX's existing
business is likely to remain in the hands of the
government, new reserves, particularly deep-water
wells in the Gulf of Mexico, may be given a special
classification. This would allow the entry of large
foreign investors, without which the multi-billion
dollar platforms needed to extract the oil could
not be built, Economides said.
also believes Mexico's natural gas industry may be
sold off to foreign companies, a fact that could
have a significant impact on Mexico's energy future.
It is not oil but natural gas, Economides argues
in his book The Color of Oil, that will dominate
the energy markets in the near future. With a gas
supply of about 45 trillion cubic feet (comparable
to the US's estimated supply, but more complex to
extract) Mexico will become a net gas importer by
2010, Economides estimates.
will this shift in the energy balance affect the
relationship between Mexico and the US, given that
a significant factor today is Mexico's ability to
provide the US with some of the vast amount of oil
it requires for economic growth? It was a question
anticipated by Tolan, who described a telling visit
to another of Latin America's oil producing countries,
Ecuador. Though that country's reserves are estimated
to last just seven more years, few there are planning
for a post-petroleum economy, Tolan said. In fact,
production is being doubled.
three panelists, despite differences in approach
to the oil dilemma, did manage to agree on one thing:
oil, for all its apparent good, may very well be
a gift from the Devil. On the verge of nationalization,
Lazaro Cardenas is reported to have said, it is better
to destroy the oil fields than let them be an obstacle
to national development.
Tolan, journalist and lecturer at Berkeley,
talks with a student after the discussion.