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Editorial Commentary
Energy Tribune: Pemex oil reforms
Mexico’s Congress set Pemex on the road to possible recovery by approving a series of reforms in September that should reduce the federal government’s dependence on oil revenues and free up more cash for the company. But although the extra cash will come in handy, it’s unlikely to reverse Pemex’s declining reserves and production. For that to happen, the executive and legislative branches would have to agree to make major structural changes to Pemex to allow it to successfully explore its promising deepwater areas. Such a move would require a degree of political cooperation rare in Mexico.
But for now Mexico’s oil industry has reasons to be optimistic. The reforms will cut the taxes Pemex pays from the current 79 percent to 74 percent next year and 71.5 percent in 2012, giving it an estimated two to three billion extra dollars a year. To compensate for the reduced oil-related revenues, Congress approved measures to hike gasoline and corporate income taxes.The reforms should also help Pemex in other ways. For one, they demonstrate that President Felipe Calderón, who spearheaded the efforts, is able to work with Congress in a way that eluded his predecessor, Vicente Fox. For months Calderón’s PAN Party worked closely with its rivals, the PRI and the PRD, to come up with a reform package. As a former energy minister, Calderón is aware of the problems facing Pemex, and has made it a priority to improve the company. And for a change, many lawmakers seem to agree that they should focus on fixing Pemex, rather than continuing to gouge it for revenues.
Randy Woods is is a Planning Advisor at ExxonMobil. Petroleumworld does not necessarily share these views.
Editor's note: This commentary was originally published by EnergyTribune, on 11/12/2007. Petroleumworld reprint this article in the interest of our readers. Petroleumworld does not necessarily share these views.
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Petroleumworld News 11/14/07
Copyright© 2007 Randy Woods . All rights reserved.
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