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Only 20 percent of Mexicans approve of PEMEX’s plan of openness to private capital, presented to the country by the president of the republic, according to a survey conducted this week in that country by Mexico City’s daily El Universal. Nevertheless, 62 percent are of the opinion that PEMEX cannot continue as it has and is in need of a reform, but they are opposed to allowing private capital to participate in the country’s petroleum activities. The comments I have read, expressed by Mexicans, concerning this matter indicate that the fundamental problem lies in the fact that they believe that private participation would open up the floodgates for the greater enrichment of Mexico’s powerful families and politicians. In other words, they think upper class Mexicans are a bunch of petty thieves. In the background to this matter there is a deep distrust among members of Mexican society.
 
They may very well know why they’re saying that. Nevertheless, saying no to PEMEX’s openness to private capital is to sentence it to a more or less speedy death. For ideological reasons, leaders such as the son of Lázaro Cárdenas, the president who expelled foreign companies from Mexico in the 1930’s, are opposed to allowing total control of Mexico’s entire means of oil production to slip out of the hands of the Mexican State. What they fail to do is point out what other way there is for Mexico’s oil production to forge ahead, because its production languishes, there is no capital in Mexico for the required investments and the company continues to be afflicted by a chronically high degree of corruption that, in the past, has resulted in the company being managed by thuggish labor unions.   
Unfortunately, this is what we are dealing with, the struggle for who gains control and who benefits from Mexico’s oil revenues. Bribery and extortion, multimillion-dollar contracts awarded arbitrarily, bid processes that benefit politicians’ families and friends, overpayments for services, collections for services or projects that were never completed; all this, and more, characterizes PEMEX’s activities in the State’s absolute hands. Paradoxically, Andrés López Obrador, another ideologue of the left, says: “there is no need for a reform, what is needed is to fight corruption within PEMEX,” without wanting to accept the fact that much of the corruption exists precisely because the only investor is the State and the corrupt people of PEMEX and its milieu think they can lay hands on that money with total impunity.

The same situation existed for years at PETROBRAS, in Brazil, during the era of its ultra-nationalistic oil policy. That company was mired in mediocrity, until it opened up to private capital. Now 30 percent of its shares are listed on the stock exchange, and that has created an automatic mechanism for surveillance by those investors as a way of reining in the guachafita (Venezuelan vernacular for ‘riotous free-for-all’). Mexico’s oil production has fallen by almost a million barrels a day during the last eight years and that should cause great alarm for a country that depends on oil for almost 40 percent of its income.  

In Mexico, as well as in Venezuela, words weigh more than reality. The monkey wrench holding up the works is the word Privatization. PEMEX must not be privatized, they say. But they do not stop to think that an industry can allow participation by private capital without the nation losing control over its wealth. In much of Latin America, dogmas, myths and complexes have perpetuated our poverty and backwardness. Some primates in our jungles die of hunger as they cling to a nut they cannot remove from inside the fruit because the hand and the nut together cannot be pulled out. They could very well let go of the nut and remove their hand, but they die there, clinging to what cannot be extracted. What is an irrational attitude in the jungle is doubly irrational in the case of PEMEX and its dogmas espousing state ownership.

Many thanks to W. Klemme, for his excellent translation.

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Gustavo Coronel is a 28 years oil industry veteran, a member of the first board of directors (1975-1979) of Petroleos de Venezuela (PDVSA), author of several books. At the present Coronel is Petroleumworld associate editor and advisor on the opinion and editorial content of the site. All his articles can be read in Gustavo's blog. Las Armas de Coronel . Petroleumworld does not necessarily share these views.

Editor's Note: Translation courtesy of W. Klemme

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Petroleumworld News 08/16/2013

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