Felipe Calderon
Enrique Peña Nieto is scrambling to save the legacy of his much-lauded
reform of Mexico’s oil industry as the doors of Mexico’s political
cycle close on the president amid electoral defeats, political violence
and a tough global environment for the oil industry.
Meanwhile, Pemex chief Jose Antonio
Gonzalez Anaya seeks to defend the formerly invulnerable castle of the
state oil company from what some fear could be imminent collapse.
Right behind him is Isaac Volin, head of PMI International, the state
company’s international trading arm, and the company’s second in
command in practical terms.
Gonzalez Anaya was appointed in February. Volin followed in June. Neither had previous experience in the oil business.
On his appointment, Volin was described by Pemex as a person “with
extensive experience in the restructuring of companies and business
units in order to raise their profitability and reposition them
strategically.”
Volin is also likely to further broaden the client-base for Mexican crude as a hedge for expectations of US self-sufficiency.
Pemex’s domestic product monopoly is tumbling down as US companies
develop rail routes, pipelines and terminals to target northern Mexico
with oil and gas products.
There may not be much Pemex can do to defend that market segment but it could look to develop other regions of the country.
Pemex would be much more likely to concentrate in the markets in southern and central Mexico.
“It’s a big country,” said Arturo Carranza, of Mexico’s National
Institute of Public Administration. “There’s room for everyone.”
There is plenty of room, but very little time for Gonzalez Anaya and Volin.
“I’d not give them much more than a year in order to make the
necessary changes,” said Mexico City-based independent analyst Dwight
Dyer.
One term presidency limits reform efforts
The reason lies in the political system. Each presidential
administration lasts for six years, and there is no re-election. Many of
the major policy decisions and projects by the previous administration
are quietly shelved, among them those of Pemex with price tags of
billions of dollars. And only rarely have Pemex chiefs survived the
transition between one administration and the other.
The 2018 presidential election will almost certainly be hotly
contested, but one candidate in particular will be watched by the oil
industry. The early front-runner in the polls, Andres Manuel Lopez
Obrador is aiming for a third attempt to win the presidency in 2018,
after having been runner-up twice.
Lopez Obrador is a firm opponent of the energy reform, with a
political constituency similar to that of Brexit in the United Kingdom.
“Even if he wins in 2018,” said a political adviser in Mexico to one
of the majors, “it’s not at all likely that he could achieve a majority
in Congress to overturn the reform.
“But what could be very likely is that he could simply sit on his
hands rather than advance what has already been achieved. That could be
just as harmful as an outright rejection.”
There is precedent for new leaders to let a previous administration’s projects be laid to waste.
In 2000, the first really free and fair elections in Mexico gave
victory to the pro-business National Action Party, the PAN, led then by
Vicente Fox, who made an ambitious development plan with Central
American countries.
The central project was to have been a $10 billion-plus refinery with
Mexican crude as the main feedstock. Tenders were invited and a
pre-qualification process was launched. Then the Fox administration
ended. His successor, Felipe Calderon, never said the refinery project
was cancelled, but simply didn’t do anything else with it.
Then Calderon announced a $10 billion-plus new Pemex refinery. The
location was decided during a two-day “beauty pageant” of presentations
by about half a dozen rival state governors. Before Calderon left
office, tenders were invited, but in the end only the perimeter fence
for the refinery was built.
Lopez Obrador came to prominence last century as a popular leader
among peasant farmers and fishermen who claimed that their livelihoods
were damaged by the excesses of Pemex.
Those excesses and the corruption that accompanied them were regarded
by Lopez Obrador as an affront to the very spirit of the nation. As a
result he’s no friend of Pemex, and it remains to be seen how he would
approach managing the state company.
If he wins, and history is any indication, the country’s ambitious
plans for the future of the oil industry could end not with a bang but a
whimper.
Ronald Buchanan,
Mexico correspondent
Ronald is S&P Global Platts' correspondent in Mexico, covering
the country's energy and metals industries. As a freelance writer, he
contributes to the Financial Times and Sunday Times; and daily web
editing for República Media Group (San José, Costa Rica).
No comments:
Post a Comment