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October 18, 2011 4:47 pm
The frontrunner in Mexico’s 2012 presidential election has raised the prospect of opening up the state-run oil sector to private investment for the first time in more than half a century.
Enrique Peña Nieto, a former state governor for the centrist Institutional Revolutionary Party (PRI), told the Financial Times that Mexico had been a “hostage” to ideology, which had slowed development and dynamism in the energy sector.
Pemex, the state-run monopoly and one of the world’s largest oil companies with annual sales exceeding $100bn, “can achieve more, grow more and do more through alliances with the private sector,” he said.
Mexico is one of the world’s top 10 oil-producing nations but production has fallen to less than 2.6m barrels a day compared with 3.4m in 2004.
Mr Peña Nieto, who is seeking his party’s nomination to run in next July’s presidential election, stressed that he was not outlining election pledges but “sharing” general ideas, as Mexican electoral laws prohibit would-be candidates from making specific campaign proposals until next March.
Even so, his comments are remarkable given prevailing Mexican attitudes. Mr Peña Nieto’s own party, the PRI, nationalised the oil sector in 1938 and ensured that Pemex remained the country’s sole oil producer and only gasoline retailer. The constitution prohibits Pemex from forming joint-risk contracts with third parties which help to spread the risks and costs of finding and extracting oil.
In his first interview with international media since declaring his desire to run, Mr Peña Nieto shied away from specific plans. However, he said Mexico should examine mechanisms used in several other countries to liberalise the oil sector.
“Different mechanisms could be explored to ensure an involvement for the private sector in its alliance with Pemex... Brazil is one example,” he said.
Petrobras, Brazil’s state-controlled oil company, raised $70bn in a minority share issue in 2010. The offering, then the world’s largest, also helped turn the Brazilian stock exchange into one of the world’s dynamic capital markets.
“Mexico cannot waste this opportunity,” Mr Peña Nieto said. “I believe that it is possible to find mechanisms that guarantee, on one hand, the state’s ownership of the oil in Mexico but on the other, mechanisms to achieve and encourage a greater involvement of the private sector... we have to take much more audacious steps.”
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