MEXICO CITY, March 24 (UPI) -- At the beginning of the last century, Ramon Lopez Velarde, an extraordinary Mexican poet, wrote in his work "Gentle Motherland" of the glories of Mexico and "the gift of the devil" -- the nation's petroleum riches. Lopez Verlade's characterization has entered the 21st century with increasingly greater significance.
Mexico's most important fiscal resource is its revenue from its petroleum sales, but the black gold's perennial flow is today beginning to show its limits. Mexico's oil industry is exhibiting signs of deep crisis and unless urgent steps are taken, Mexico paradoxically will slide from being a petroleum exporting country to becoming a fuel importer within the next decade.
PEMEX, the company that monopolizes petroleum production in Mexico, is on the brink of bankruptcy, paralyzed by a lack of investment and governmental extortion of profits, abetted by more than a half-century of corrupt officials of the partly state-owned company in collusion with the oil union.
Even the Secretary of Energy Fernando Elizondo acknowledges that production costs in Cantarell field, responsible for over half the country's exports, has doubled over 25 years because of poor investment.
In 2004, ironically, thanks to record-high crude prices, all the major global oil producers registered historically high profits except PEMEX. Exxon Mobil made profits of more than $25.3 billion, while Chevron Texaco reported the highest profits in its 125-year history -- over $13.3 billion. In Latin America, even Venezuela Petroleum, known as PDVSA, and Brazil's Petrobras rang up profits of more than $6 billion dollars apiece. In contrast, PEMEX's figures were in the red, which they have been since 1998.
Despite the record-high prices of crude and a volume of production that places it among the world's major oil producers, the net result for PEMEX was that it managed only to reduce its losses from $3.6 billion in 2003 to $1.3 billion in 2004.
According to Cambridge Energy Research Associates analyst Sergio Rosado, the phenomenon occurred because of the Mexican government's high dependency on PEMEX's oil production, which generates approximately 30 percent of its income.
Analysts and government officials of the present administration have looked for alternatives to alleviate the enormous pressure facing PEMEX with its responsibility of generating revenue for the country without neglecting the necessary investment in growth, maintenance and operation that a company of PEMEX's magnitude should have.
The resulting studies proposed reforms would increase private investment in the nation's energy sector by restructuring PEMEX as proposed by the present government of President Vicente Fox. Unfortunately, the proposal is frozen in a fractious legislative chamber. The process of the legislature restructuring the nation's energy sector has been politicized and has turned into a campaign by leftist radicals and the traditional Institutional Revolutionary Party, or PRI, members who are intent on -- under the flag of nationalism and anti-corruption laws -- preventing private investment in the nation's energy sector at all costs.
During the PRI's last national convention in Puebla, the party seemed to shift slightly to capitalize on the political advantages of softening the rigid stances in their energy issues statutes, proposing to look for alternatives for developing PEMEX.
The president of the House of Representatives, PRI legislator Manlio Fabio Beltrones, said, "A new initiative will have to respond to (PRI) intentions of modernizing (PEMEX)." The PRI is evidently in disarray over the issue as PRI parliamentary coordinators in the House of Representatives and Sens. Emilio Chuayffet and Enrique Jackson deny that their party is preparing an initiative for the energy sector.
The Democratic Revolution Party is more forceful. Andres Manuel Lopez Obrador sharply delineated his party's position on energy issues, noting, "We are against the privatization of the energy industry. ... Let this be heard by all and far and wide. And (unlike the PRI), it is not an ideological position."
PEMEX is almost 67 years old. Its deterioration is obvious to all. Furthermore, the loss of capital is not the only danger it faces. In the last nine years, PEMEX's four subsidiaries registered at least 20 accidents that left 27 dead, more than a thousand people injured and millions of dollars of economic losses and damage to the environment.
According to PEMEX director Luis Ramirez Corzo, during 2004, PEMEX spent only $1.33 billion in preventive maintenance, the lowest amount in a decade. The amount is a far cry from what most major oil companies spend to bring their facilities up to international standards. That upgrade usually requires an investment of 30 percent of income. Given the corruption, lack of investment and political posturing, it would seem in the short term that PEMEX's financial hemorrhaging will continue, despite the record-high energy prices and increasing world appetite for oil.
(Carlos Alberto Becerril is a writer with Tiempos del Mundo)
