Hernan Gonzalas has watched critically as Mexico’s bloated, insular and famously corrupt national oil company has tried to transform itself from a monopoly to a 21st-century business that has competitors.
Gonzalas, who is Louisiana Economic Development’s man in Mexico and has been an oil executive for decades, is more optimistic than he was one year ago. In October 2013, sitting in the international guest room at the Louisiana Gulf Coast Oil Exposition in Lafayette, Gonzalas expressed doubts that his country could muster the political will to fundamentally change Petróleos Mexicanos, or Pemex.
“I was pretty surprised that (Mexico’s) congress went along with the referendums. There was a lot of opposition,” Gonzalas said last week at a Lafayette meet-and-greet introducing Mexican oil and gas executives to south Louisiana’s service companies.
The event was hosted by Le Centre International de Lafayette, and focused on the opportunities in the state of Tabasco, which contains the ports for Mexico’s mostly untapped offshore waters.
Mexico’s national oil company has had sole responsibility for mining the country’s vast reserves since 1938, when President Lázaro Cárdenas nationalized the industry, kicked the Americans out and declared the people of Mexico were the sole owners of energy resources.
Since that time, Petróleos Mexicanos has contributed mightily to the Mexican government’s purse, roughly one-third of the country’s revenue each year. But in those 76 years, Pemex became a calcified political machine, concerned as much or more with patronage and fiefdoms than with running an efficient company that innovated and added to production each year. Then the easy-to-get oil and gas started to run dry, and Pemex had to borrow heavily to meet its obligations. Mexico’s prohibition on foreign ownership of the people’s resource was showing its shortcomings.
President Enrique Peña Nieto, elected in 2012, started pushing congress to loosen the rules to allow outsider companies to directly invest billions of dollars in oil and gas ownership and provide technology that Pemex lacks.
Gonzalas said the constitutional and congressional changes, all ratified in the last 10 months, has put Pemex in competition with other producers.
Pemex will try to change from the political machine it was for three-quarters of a century to a business that’s not afraid of competition, Gonzalas said. He said the changes would be hard to digest for those who liked the way things were.
Gonzalas and the majority of legislators in Mexico’s congress believed that left unaltered, Pemex would implode.
Angela Cring, executive director of LAGCOE, said the hundreds of service companies in south Louisiana are taking a wait-and-see approach before venturing into Mexico. Cring said the small to midsize service companies work for huge service firms such as Frank’s International, Schlumberger and Halliburton. Or, she said, they work directly for the oil and gas producers that have the expertise of operating in a foreign country, where Byzantine tax and labor laws often are the norm.
“Most companies are going to ride in on the bigger companies,” Cring said.
Cring also said Pemex’s rule changes will have to sink in and solidify before Louisiana’s oil and gas sector gets comfortable with allocating its cash and talent to projects in Mexico.
Cring would not comment on Pemex’s problems with graft, but Gonzalas did.
“That corruption will not disappear, but it will diminish,” Gonzalas said.
Billy Gunn is a staff writer for The Acadiana Advocate. He can be reached at firstname.lastname@example.org.