The battle lines over the future of Mexico's oil industry hardened Tuesday — the 70th anniversary of its nationalization.
At a ceremony in the oil state of Tabasco celebrating the takeover, President Felipe Calderon issued a call for more private investment in the national oil company, Pemex. He proclaimed the fate of the company the defining issue of his generation.
Several hours later his leftist rival, Andres Manuel Lopez Obrador, led a huge protest march in the capital against any form of privatization. At stake is the viability of Mexico's oil company, which provides nearly 40 percent of the government's budget and sends 1.4 million barrels a day to the United States through the Houston area.
After nearly two decades of free-market policies that have seen most government-owned industries privatized, communal farms dismantled and labor unions weakened, nationalized oil remains as one of the few economic touchstones of the Mexican Revolution.
In 1938, President Lazaro Cardenas expropriated the oil fields, following months of turmoil involving strikes by Mexican workers.
"The oil is ours!" became a rallying cry for generations of Mexicans. Oil revenue fueled decades of development and other sources of revenue were left untapped.
High world oil prices have assured huge profits for Pemex. But the country's proven reserves and production have declined as the offshore Cantarell field plays out. The field has accounted for two-thirds of Pemex's production over the past three decades.
"To transform Pemex is to strengthen Mexico," Calderon said Tuesday.
Without new proven reserves and increased production, he said, Mexico would cease being an oil exporter in nine years, and cash-strapped Pemex would not rebound without foreign investment and technology.
Calderon and others argue that private participation is necessary to develop the ultradeep-water fields in the northern Gulf of Mexico that will anchor Pemex's future.
But those opposed to private investment insist that Pemex can develop the new fields on its own. They shrug off predictions of Pemex's impending collapse as scare tactics meant to pressure a sale to the Americans and other foreigners.
"This is very sensitive for the Mexicans," said political analyst Alfonso Zarate.
"People in general have a lot of fear about private participation in the oil industry."
Though public unease about Pemex's future has been widespread, opposition to private involvement is spearheaded by Lopez Obrador, the politician who narrowly lost to Calderon in 2006.
Lopez Obrador's campaign against the "privatization" of Pemex — which Calderon and other government officials insist is not on the table — has bolstered the former Mexico City mayor's political fortunes. His prospects were strengthened by last Sunday's internal elections in the Democratic Revolution Party, in which his allies won most leadership posts.
At the same time, Calderon's ability to push his agenda for Pemex in Congress has been weakened by a scandal surrounding Interior Minister Juan Camilo Mouriño, who is accused of influence peddling.
Mouriño has been seen as Calderon's chief negotiator in the ongoing Pemex debate.
"Lopez Obrador demonstrated his astuteness and his capacity to hit hard at the right moment," Zarate said.
"There is a very important political base that supports his arguments."
The most promising replacements for Cantarell lie in the ultradeep seas of the northern Gulf, close to U.S. and Cuban territorial waters. Pemex doesn't have the technological capacity to drill the deepwater wells. Foreign companies are developing deep-water wells in Cuban and U.S. fields.
Mexican proponents of partnering with private companies argue that if Pemex doesn't begin drilling soon, it will lose control of the internationally shared deep-water fields.
At a ceremony in the oil state of Tabasco celebrating the takeover, President Felipe Calderon issued a call for more private investment in the national oil company, Pemex. He proclaimed the fate of the company the defining issue of his generation.
Several hours later his leftist rival, Andres Manuel Lopez Obrador, led a huge protest march in the capital against any form of privatization. At stake is the viability of Mexico's oil company, which provides nearly 40 percent of the government's budget and sends 1.4 million barrels a day to the United States through the Houston area.
After nearly two decades of free-market policies that have seen most government-owned industries privatized, communal farms dismantled and labor unions weakened, nationalized oil remains as one of the few economic touchstones of the Mexican Revolution.
In 1938, President Lazaro Cardenas expropriated the oil fields, following months of turmoil involving strikes by Mexican workers.
"The oil is ours!" became a rallying cry for generations of Mexicans. Oil revenue fueled decades of development and other sources of revenue were left untapped.
High world oil prices have assured huge profits for Pemex. But the country's proven reserves and production have declined as the offshore Cantarell field plays out. The field has accounted for two-thirds of Pemex's production over the past three decades.
"To transform Pemex is to strengthen Mexico," Calderon said Tuesday.
Without new proven reserves and increased production, he said, Mexico would cease being an oil exporter in nine years, and cash-strapped Pemex would not rebound without foreign investment and technology.
Calderon and others argue that private participation is necessary to develop the ultradeep-water fields in the northern Gulf of Mexico that will anchor Pemex's future.
But those opposed to private investment insist that Pemex can develop the new fields on its own. They shrug off predictions of Pemex's impending collapse as scare tactics meant to pressure a sale to the Americans and other foreigners.
"This is very sensitive for the Mexicans," said political analyst Alfonso Zarate.
"People in general have a lot of fear about private participation in the oil industry."
Though public unease about Pemex's future has been widespread, opposition to private involvement is spearheaded by Lopez Obrador, the politician who narrowly lost to Calderon in 2006.
Lopez Obrador's campaign against the "privatization" of Pemex — which Calderon and other government officials insist is not on the table — has bolstered the former Mexico City mayor's political fortunes. His prospects were strengthened by last Sunday's internal elections in the Democratic Revolution Party, in which his allies won most leadership posts.
At the same time, Calderon's ability to push his agenda for Pemex in Congress has been weakened by a scandal surrounding Interior Minister Juan Camilo Mouriño, who is accused of influence peddling.
Mouriño has been seen as Calderon's chief negotiator in the ongoing Pemex debate.
"Lopez Obrador demonstrated his astuteness and his capacity to hit hard at the right moment," Zarate said.
"There is a very important political base that supports his arguments."
The most promising replacements for Cantarell lie in the ultradeep seas of the northern Gulf, close to U.S. and Cuban territorial waters. Pemex doesn't have the technological capacity to drill the deepwater wells. Foreign companies are developing deep-water wells in Cuban and U.S. fields.
Mexican proponents of partnering with private companies argue that if Pemex doesn't begin drilling soon, it will lose control of the internationally shared deep-water fields.
Source: Houston Chronicle| By DUDLEY ALTHAUS
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