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Mexico' Election: Not serious discussions on oil policy
By Jim Landers
Dallas Morning News
MEXICO CITY
Petroleumworld.com 06 23 06I met the man who may be the next president of Mexico when he was lying in a hammock in an orange grove, wearing blue jeans and a work shirt and holding a straw hat.
On that June afternoon in 1995, Andrés Manuel López Obrador and a few hundred former oil workers had paused for a siesta on a 560-mile march from Villahermosa to Mexico City.
They were protesting a Tabasco gubernatorial election that went against Mr. López Obrador and warning the federal government to abandon plans to let foreign investors take work away from Petróleos Mexicanos, the state oil company.Mr. López Obrador said then what he's been saying during the presidential campaign this year:
"Now the North American companies want to put their hands on Pemex. We have to stop it. Pemex is what is left to the country, what we have left. It is our guarantee of independence and sovereignty."
Mexicans will elect a president July 2 after a campaign that, once again, has skirted the most fundamental question of the Mexican economy: What should be done to keep Mexico from running out of oil?
Most of Mexico's oil comes from the Cantarell, a supergiant group of offshore fields in the Gulf of Campeche.
The Cantarell has begun a decline that could cut output in half – by a million barrels a day – within four years.
When that decline is coupled with rising oil consumption, Mexico could see major weakness in its oil exports during the six-year term of the next president.
Oil accounts for 30 percent of Mexico's $185 billion federal budget. And Mexico is the second-largest oil supplier to the United States, accounting for nearly 8 percent of U.S. consumption.
Mr. López Obrador, leading the leftist Party of the Democratic Revolution (PRD), promises wage and pension subsidies for most Mexicans, but without raising taxes or allowing foreign investment in the oil sector that could raise production. He vows to cut gasoline prices, about $2.18 a gallon, by 10 percent.
In March, he promised to increase onshore drilling to replace Cantarell, but with an annual exploration and production budget of just $1.4 billion. Pemex officials have been saying they need $10 billion to $20 billion a year for drilling offshore to maintain production at 3.4 million barrels a day.
"We are not going to privatize the electrical or oil industries in any of their forms," Mr. López Obrador said. "These resources are neither the state's nor the government's. They belong to the nation. They are resources of all Mexicans."
There are five candidates for president on the ballot, and the winner will be whoever gets the most votes. Most opinion polls show Mr. López Obrador slightly ahead, but two give the lead to the conservative candidate, Felipe Calderón of the National Action Party (PAN).
Roberto Madrazo of the Institutional Revolutionary Party (PRI), who took the Tabasco governorship in that race with Mr. López Obrador in 1994, is apparently in third place.
Ernesto Marcos, a former chief financial officer of Pemex who is advising Mr. Madrazo's campaign, said Mexico must find international partners to make the expensive, risky investments in the deeper waters of the Gulf that are needed to replace the Cantarell.
But that's not what people are talking about.
Mr. Calderón has argued for foreign partners but then backed away from that in a Newsweek interview published Sunday.
"There have not been serious discussions on policy," Mr. Marcos said. "Everybody's offering to lower prices of gasoline – exactly the opposite of what is required."
George Baker, head of the Houston consulting firm that publishes Energia.com, said that's just the way energy plays in Mexican presidential politics.
"Nobody wins votes by being ahead of the curve on petroleum policy," Mr. Baker said. "You can be faulted, perhaps irrevocably, for being the equivalent of soft on communism."
E-mail jlanders@dallasnews.com
Platts 22 06 06
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