For Many, Control of State-Run Pemex Is About National Pride

Politician Andrés Manuel López Obrador leads a rally in Mexico City to protest President Felipe Calderón's push to let Pemex sign private contracts. (By Gregory Bull -- Associated Press)

Though Mexico is one of the world's top 10 oil producers, its refineries can't keep pace with domestic demand. The country actually has to import 40 percent of the gas it consumes, amounting to more than 300,000 barrels per day.

Reform plans have been percolating for months. According to sources not authorized to comment publicly, some in the Calderón administration pushed for a more ambitious proposal that would have allowed public sale of some shares in Pemex, an approach used by state-controlled oil firms in Brazil and Norway. But that would have required a national vote on a constitutional amendment; Calderón opted for a less audacious proposal.

Still, his plan has run into numerous roadblocks. In March, Interior Minister Juan Camilo Mouriño -- who was supposed to spearhead the reform effort -- was accused of steering government contracts to his oil baron father, dealing a setback to Calderón's proposal before it was even formally unveiled. Mouriño, who has denied wrongdoing, has resisted calls to resign.

Opponents have also held protests, with failed presidential candidate Andrés Manuel López Obrador calling thousands to Mexico City's downtown square, El Zocalo, in scenes reminiscent of the long fight over results of the 2006 election.

Meanwhile, the proposal has received a stony reception from independent analysts. Juan E. Pardinas, a Mexico City-based analyst, said in an interview that the measure "falls very short" of solving Pemex's problems.

Analysts say some of Pemex's greatest problems are related to the lack of flexibility it has with revenue. Rather than reinvest in technology that could boost production, the company is obligated to send much of its money to the government. The system has paralyzed Pemex managers, who fear their government overseers will criticize their every move and therefore are afraid to take even reasonable risks in exploring for new oil fields, Shields said.

"The Calderón bill doesn't solve any of the major problems that Pemex has," Shields said.

As a result, the proposal's supporters have had to spend almost as much time arguing that the measure is not a weak, watered-down initiative as they have arguing the perceived merits of the plan. "This is not 'reform lite,' " Congressman Alonso Lizaola de la Torre, of Calderón's National Action Party, or PAN, said in an interview.

The alternative being presented by the proposal's opponents centers on changing the way Pemex operates, rather than inviting foreign investors. Sánchez Camacho, the PRD lawmaker, said that his party is pushing for the federal government to invest more money in inexpensive searches for oil on land and in shallow waters, instead of focusing on pricier deep-water drilling. He and others in the PRD also are demanding that the federal government give a better accounting of the money it gets from Pemex. He alleges that millions are wasted, "gone down a black hole," each year.

Sánchez Camacho alleges that privatization proponents have purposely let Pemex deteriorate in order to convince Mexicans that the company is beyond hope as a national enterprise.

"They're trying to scare us," Sánchez Camacho said.

But it is the government that should be scared, he said.

"If they try to sneak this past us, we'll take the streets," Sánchez Camacho said. "This country will become ungovernable."