Not for the first time, private sector energy leaders are holding high-level talks with senior officials of the current Mexican government in an effort to boost investment in oil, gas and power.
This comes after Mexico’s government announced five energy projects worth $5 billion as part of a new public-private infrastructure plan.
Four of the projects would be executed by Petroleos Mexicanos (Pemex) and the fifth by the state power utility Comisión Federal de Electricidad (CFE).
The plan was designed and will be controlled by the state, but private sector companies aim to play a substantial role in the planning and execution of new projects, according to energy consultant Arturo Carranza.
Worth around $14 billion, the list of 39 public-private projects is meant to jumpstart the ailing economy.
“It’s very important that we all know that we can’t go it alone, that the public sector can’t reactivate economic activity on its own,” President Andrés Manuel López Obrador said during the announcement of the plan on Oct. 6.
Of the 39 announced projects, seven are already underway and five are considered to be energy-focused.
Pemex would oversee two petrochemical projects and refinery upgrades at Tula and Cadereyta. The Salina Cruz natural gas liquefaction project, the fifth project, would require 25 billion pesos ($1.2 billion) in investment and will be spearheaded by CFE and La Administración Portuaria Integral (API).
It is unclear exactly how the private sector would be involved.
During the infrastructure plan announcement, the president was flanked by business leaders including Carlos Salazar, the head of business chamber Consejo Coordinador Empresarial (CCE).
At a time of considerable friction between the government and the private sector, Salazar said that López Obrador understood “the support private investment can give to our country, and the importance of working together and united.”
Analysts suggest that the environment under López Obrador makes it very difficult for new initiatives in the oil sector to emerge.
The energy reform of 2013 enabled private and international oil companies to become Pemex’s business partners, sharing risks and rewards, according to Mexico Energy Intelligence’s George Baker. But in the post-2018 world, Pemex has little to offer potential private-sector partners in the current circumstances.
“Under no circumstances could it offer an advantage by its credit rating and access to capital markets,” Baker told NGI’s Mexico GPI. “Pemex executives seldom last in their post, and the director-general usually has no oil industry background.”
On the issue of corporate governance, Pemex on occasion has the image of being a law unto itself, Baker said.
Pemex faces problems in the upstream. An illustration of this is that fact there is no official director of Pemex Exploración y Producción (PEP), the company’s upstream arm, according to Carranza.
Miguel Ángel Lozada, a 35-year veteran Pemex engineer, was named as the head of PEP in late 2018. The following year, however, he was accused of fraud.
According to Carranza and reports from several Mexican newspapers, Lozada has continued to operate as head from his office at PEP headquarters in Villahermosa, Tabasco, although he keeps well out of the public eye and uses a substitute PEP chief as stand-in for quarterly reports.
Previously, Carlos Morales Gil ran PEP for more than a decade.
“El Ingeniero, as he was always known, was happy to talk with people from other companies. And he was always at hand at the drop of a hat to explain the upstream success and failures of Pemex,” Carranza said.
Morales quit Pemex in 2015 and took on a private sector post as head of the independent exploration and production firm Petrobal.
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