Mexico Leader Said to Seek Changes to Break Oil Monopoly

[Judi Lynn]

Mexico Leader Said to Seek Changes to Break Oil Monopoly
By Eric Martin & Nacha Cattan - Aug 5, 2013 10:06 PM CT

Mexican President Enrique Pena Nieto will seek to amend three articles of the constitution to break Petroleos Mexicanos’s monopoly in the state-run oil industry, according to two people with direct knowledge of the bill.

Pena Nieto will propose production-sharing contracts for oil exploration and output, according to the people, who asked not to be named because the bill will be officially presented by tomorrow. The proposal will seek to change articles 25, 27 and 28 of the constitution, and tenders for the most part would be managed by government regulators, the people said yesterday.

The overhaul would be the biggest change for the industry since 1938, when then-President Lazaro Cardenas seized oil fields from British and U.S. companies and changed Mexico’s charter to assert control over its energy resources. Pena Nieto’s proposal also would break the electricity distribution monopoly held by state power company Comision Federal de Electricidad, or CFE, according to one of the people.

“When you talk about changing the constitution, the historical magnitude of that phrase is going to make a lot of people in a lot of places pay more attention,” Jeremy Martin, an oil specialist at the Institute of the Americas in La Jolla, California, said yesterday. “This is the big ticket. This is very close to the whole enchilada.”

More:
http://www.bloomberg.com/news/2013-08-06/pena-nieto-said-to-seek-amendment-to-share-mexico-oil-production.html

[Socialistlemur]

1. Mistaken impression seems to last forever

The idea that nationalization is required to control an industry is quite old within the Latinamerican left. I guess it comes from a mistaken perception of the true levers of power. Nations ranging from Norway to the United Kingdom to Russia, China, Cuba, Brazil, and Angola have private industry participation at all levels. I won't go into each country's technique and legislation, but nobody in their right mind would say the government doesn't have full control.

In Mexico's case their constitution happens to be outdated. I suppose communists would oppose a constitutional change, or those who like I wrote above just don't know how a government can be run properly (and I think it takes a lot of genitals so say the Norwegians don't know how to run things). The Mexicans can change their constitution and improve performance, but they do need to focus on corruption and forming a really professional and well paid Ministry of Oil and Gas bureaucracy. If they fail to do so, they won't accomplish much.