An Update on Oil Reform and the Election in Mexico

By Duncan Wood

Since Enrique Peña Nieto (EPN) announced in November of 2011 that he would seek a full scale oil reform to allow Pemex to follow a Petrobras-like business model, the issue has become one of the most talked about themes in the campaign for the July 2012 elections. Peña Nieto’s call for a change in Mexico’s legislation to allow Pemex to work more freely with the private sector has spurred the other leading candidates to formulate their own ideas on the future of the Mexican oil industry. Josefina Vázquez Mota, the leading contender for the PAN presidential nomination, having immediately echoed EPN’s sentiments about the need for reform, last week began to elaborate on her plans for Pemex. Using the terms “co-investment” and “opening”, Vazquez Mota hinted at the possibility of listing Pemex on the Mexican stock exchange, the Bolsa Mexicana de Valores. This is intriguing because it brings us to the realm of privatization, a word that no one has been willing to associate with Pemex in recent years, unless it was to raise fears that the national oil firm would be sold off. Is it possible that the Panista is now contemplating a policy that would lead to the partial privatization of the firm? In some ways, of course, this is what Peña Nieto himself has suggested; the “Petrobras model” involves selling shares in the firm into private hands, while maintaining control of the company by the federal government.

The PRD, on the other hand, has continued to stress the need to guarantee that Pemex is not privatized and that full control remains in public hands. Last week Arturo Núñez of the PRD stated that the party would make sure that the national oil firm once again becomes a “pillar of national development” under a PRD presidency. In private however, the PRD’s presidential candidate, Andrés Manuel López Obrador (AMLO) has been suggesting that he is willing to consider a far-reaching reform that is modeled not on Brazil’s Petrobras, but rather on Norway’s Statoil. This raises the possibility that all three of the main party candidates will be willing to negotiate a far-reaching reform of Mexico’s oil sector in 2013, a tantalizing prospect.

Duncan Wood is a senior associate with the Simon Chair and the Americas Program.