The president’s plan, which would rewrite two constitutional amendments, challenges a bedrock assumption of Mexico’s national identity — its total sovereignty over its energy resources — by inviting private companies to explore and pump for oil and natural gas.
Mr. Pena Nieto’s goal, like those of presidents before him, is to recharge Mexico’s economy by tackling areas that analysts agree hinder its expansion, which has averaged just 2.2 percent a year since 2001, according to the Organization for Economic Cooperation and Development.
Perhaps the worst of those is the creaky energy sector. Demand for energy in the country is growing so fast that Mexico could turn from an energy exporter to an energy importer by 2020, the government says.
Already, Mexico must import almost half its gasoline, mostly from the United States. Mexican companies pay 25 percent more for electricity than competitors in other countries, the government says. Although Mexico has some of the world’s largest reserves of shale gas, it imports one-third of its natural gas.
In advancing the plan, Mr. Peña Nieto is making a gamble that the support he has built with opposition parties to make deep changes in education and telecommunications policy will carry over into the debate over energy and a related tax proposal he will send to Congress next month.
“With the reform that we are presenting, we will make the energy sector one of the most powerful engines in the economy,” Mr. Peña Nieto said at a ceremony to present the plan on Monday.
So far, Mr. Peña Nieto has proved astute at negotiating changes based on a list of commitments that all three major political parties agreed on last December. He has been helped by the two main opposition parties’ weakness after the 2012 election, which gave Mr. Peña Nieto’s Institutional Revolutionary Party, or PRI, a majority in Congress.
But his two major victories in education and telecommunications were comparatively easy. There was already consensus on the need to rein in the power of the teachers’ union and the companies that control telecommunications and television broadcasting.
In energy, the divisions are much deeper. In particular, Mexico’s left-wing parties have been adamant that the Constitution’s 75-year-old prohibition on private investment should remain ironclad. From the right, the National Action Party, or PAN, proposed energy reform last month that would go even further than Mr. Peña Nieto to invite in private investment.
Public opinion is also suspicious about opening up the industry. A survey last year by CIDE, a Mexico City university, found that 65 percent of the public opposed private investment in Pemex, the state-owned oil monopoly.
“The entire energy reform is a potential source of conflict,” said Luis Miguel Labardini, a consultant with Marcos y Asociados, a Mexican energy consulting firm. “Sometimes in Mexico we are conflict-averse.”
The proposal would allow private companies to negotiate profit-sharing contracts with the government to drill for oil and gas. Under such a scheme, the reserves would continue to belong to the Mexican state, but investors would get a share of the profits. Private investment would be allowed in refining, oil pipelines, and petrochemical production.
Although most analysts believe that Mr. Peña Nieto has the votes in Congress to pass the reform if the PAN votes along with his party, the president appears to want to sway public opinion, as suggested by his decision to make a prime-time televised address on the subject Monday.
“It is fine to appeal to rationality, but when it is about these issues, it’s indispensable to touch the audience’s heart,” wrote an analyst, María Amparo Casar, in the Excelsior newspaper last week.
The left-wing leader, Andrés Manuel López Obrador, who won more than 30 percent of the vote in last year’s general election, is planning street marches to protest the change. If he succeeds in filling the streets of the capital it may be harder for party leaders to stand behind the plan.
Since the 1994 North American Free Trade Agreement exempted energy from Mexico’s broad economic opening, presidents have attempted to loosen the prohibitions that give Pemex sole control over all oil and gas exploration and production. No joint ventures are allowed. Those past proposals have often withered in Congress.
But this time, the precipitous decline of Mexico’s energy industry may work in Mr. Peña Nieto’s favor.
Pemex, which was long an important source of crude imports into the United States, is spending more to pump less. As Mexico’s giant Cantarell oil field in the shallow waters of the Gulf of Mexico has declined, production has dropped 25 percent from the peak in 2004, to just over 2.5 million barrels of oil a day.
At the same time, the amount the government budgets for Pemex to invest has steadily climbed to $26 billion this year. To increase production and reserves, Pemex needs to drill in the deep waters of the Gulf of Mexico and in onshore deposits of shale oil and gas. But the company has neither the capital nor the expertise to increase production significantly, analysts say.
Article source: http://www.nytimes.com/2013/08/13/world/americas/mexican-president-invites-foreign-investment-in-energy.html?partner=rss&emc=rss
