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Lagniappe
George Baker:
Mexican oil experts and heirs address the future
The face of anti-globalization in the energy sector in Mexico has reappeared in public statements by two prominent Mexican personages, former Pemex CEO Adrián Lajous and three-time Party of the Democratic Revolution (PRD) presidential candidate Cuauhtémoc Cárdenas.
The first in a long article published in Este Pais (September 2006), a magazine owned by a family with Institutional Revolutionary Party affiliations. And the latter via a paid announcement (and therefore not accessible on the Internet) in Milenio (October 20, 2006), listing a nine point proposed energy policy.
Lajous
For having been a manager and executive in Pemex for nearly 20 years, Lajous is certainly familiar with its institutional workings, projects, accomplishments and shortcomings. For having these qualifications, his wide-ranging use of quantified data (as, for example, production costs) carries an air of authority.
In his 12-page tightly argued article, Lajous reviews many of the management issues and ideas related to the oil sector that have been floated during the Vicente Fox administration — Pemex fiscal and labor reforms, for example. Most of his analysis however is devoted to upstream issues. Lajous underscores the need to strengthen Pemex's portfolio of prospects and discoveries, and he comments on the difficulties that will be caused by the decline of Cantarell, Mexico's major Maya-grade crude oil production field.
Lajous is silent in this article on the current proposal to reorganize Pemex into one legal entity, thereby erasing the fifteen-year experiment that he himself initiated that created a headquarters unit and four legally independent subsidiaries. While noting that Pemex's proposals to develop KMZ (Ku-Maloob-Zaap) and Chicontepec are intended to replace the volumes lost in Cantarell, he is silent on the point that the oil of the first of these two complexes is of inferior value compared to that of Cantarell.
A proposal of the current Pemex administration to which he takes exception concerns the need for strategic alliances with international oil companies. Lajous insists that the "diagnosis" is mistaken, as there is no technological advantage that cannot be bought on the open market. In taking this position, Lajous aligns himself with Mexican billionaire Carlos Slim, whose statements to the effect that international oil companies are unnecessary for Mexico appeared in the Mexican press on October 10, 2006. "Pemex needs alliances with Mexican companies," Slim was quoted as having said.
Cárdenas
A rumor is floating around Mexico that President-elect Felipe Calderón has offered, as a gesture of reconciliation to the Cárdenas wing of the PRD, two cabinet positions and the director generalship of Pemex — provided that it is Cárdenas himself who takes the Pemex post.
In his nine-point paid public notice, published not in La Jornada — the normal venue for the Mexican left — but in the centrist Milenio newspaper, Cárdenas goes over much of the same ground as that covered by Lajous, but with notable exceptions. Cárdenas proposes that the Mexican Congress, not the Executive, should make the decisions on oil extraction levels. He also proposes that Mexico should reduce its oil exports, even eliminating them entirely, and that the country should concentrate on petrochemicals and refined products. Unlike Lajous, he supports the proposal to reintegrate Pemex into a single legal structure.
Observations
• In trivializing the need for strategic alliances with international oil companies, Lajous is reaffirming a position that he has held for more than 20 years. The topic of international oil companies does not even deserve mention by Cárdenas.
• The call by Cárdenas to end oil exports, if implemented, would not only jar the international oil market and raise pump prices in the United States, but too it would provoke an unprecedented financial crisis in Mexico.
• Lajous and Cárdenas speak about Pemex plans to increase oil production in order to compensate for the Cantarell decline, but the proposed volumes from KMZ and Chicontepec will be of a far inferior quality. The fact that Lajous and Cárdenas speak "volumetrically" about replacing Cantarell barrels as if they were fungible with those of KMZ, also speaks to the yet unacknowledged shortcomings in Pemex's portfolio of upstream assets and prospects.
• Cárdenas is exploiting the anniversary of his father's death (October 19, 1970) to advance his own political causes and career by means of overtures to the incoming Calderón administration. His still revered father, President Lázaro Cárdenas (1934-1940), nationalized Mexico’s petroleum reserves in 1938 in an expropriation that was highly popular at the time, and even now is politically venerated by many.
George Baker is a MexiData.info guest columnist and the director of Energia.com, a publishing and consulting firm based in Houston. (g.baker@energia.com). Petroleumworld not necessarily share these views.
Editor's Note: The preciding article was publish by MexiData. October 30, 2006 . Petroleumworld reprint this article in the interest of our readers.
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Petroleumworld 10/31/06
Copyright ©2006 George Baker. All Rights Reserved.
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