Since the election of Mexico’s new president Enrique Pena Nieto earlier this year, the world has been watching to see if PEMEX, Mexico’s state-owned oil giant, will follow through with the reforms mentioned throughout his campaign. The general consensus is that reforms are needed to overhaul Mexico’s petroleum reserves and production, and to allow the nation to enjoy maximum benefit of its potential.
In breaking news earlier this week,Fox News reported that PEMEX CEO Juan Jose Suarez Coppel stated, ”PEMEX isn’t in crisis with its ample reserves of crude-oil and natural gas, but it needs to be given greater independence from the government and operate more like a private company.”
PEMEX is already one of the worlds top oil companies in terms of petroleum reserves and production, but it could be even more successful if it was removed from having to operate under the cumbersome federal bureaucracy, which will allow it to keep more of its considerable resources for exploration and other investments, according to Suarez.
“Even with the increases in recent years,PEMEX invests relatively little,” Suarez revealed at a recent conference. “The problem is not that we don’t have the petroleum. PEMEX has proven reserves that would last for 10 years at the current production rate, and probable and possible reserves that would add up to 30 years of production. Plus, the company is adding new reserves all the time.”
However,Fox reports that this success is undermined by factors imposed by its governmental control, such as subsidizing the price of liquefied petroleum cooking gas that is used in the majority of homes located throughout Mexico real estate, as well as subsidizing gasoline and diesel fuel and a tax rate that is above 80 percent.
Suarez announced this week that he is committed to making PEMEX more independent, modeling reforms after Mexico’s central bank, which would remove PEMEX from the federal budget process, allowing the company to clean up its finances and issue debt instruments so average Mexican citizens could invest in the company’s success.
In an encouraging display of solidarity,Mexico’s outgoing President Felipe Calderon urged Pena Nieto’s incoming government to continue pushing for changes to PEMEX. According to Fox News, an alliance between Calderon’s conservative National Action Party and Pena Nieto’s PRI is likely to help get changes to PEMEX passed, which will only serve to further grow Mexico’s already booming economy.