Skip Navigation LinksMy Argus / News / News Story

Printer friendly

Morena party seeks Pemex overhaul

06 Mar 2018 18:38 GMT
Morena party seeks Pemex overhaul

Mexico City, 6 March (Argus) — Argus recently interviewed Rocio Nahle Garcia, a member of Mexico's lower house of representatives for the Morena party, and leading presidential candidate Andres Manuel Lopez Obrador's choice for energy minister. Edited highlights follow:

Why is your party so fiercely opposed to Mexico's energy reform?

We maintain that the energy reform was implemented badly. If it had to happen, it should have taken place gradually. Aside from that, the people who carried it out are untrustworthy, with a long history of corruption. There are Mexican politicians inside the companies seeking contracts, which is a problem of conflict of interest. On the other hand, oil is a non-renewable resource. All countries, when they extract their resources, must have a responsible management programme. The moment you open [the sector] and award all your reserves in an indiscriminate way as we are doing now, it becomes a resource that we are losing.

Lopez Obrador initially promised a referendum to potentially revoke the energy reforms. He has changed tack and now says his administration would review all the contracts that have been awarded.

We would review the contracts that have been signed. We need to provide serious investors with confidence and certainty. Those firms that have invested in the country and have done so the right way have nothing to fear. If their operational and production costs are regular, not inflated, and if both the state and private-sector companies benefit, then that is great. We are not closed to business. But we want to do it in a responsible way. No other country in the world has awarded so many blocks in such a hurry. We need to look at what is happening with the contracts already awarded. If the experience is positive, we will continue.

If you win the election in July, what will be your first step?

We already have a plan for the hydrocarbons sector, and power and renewables. As part of this, we are considering the renovation of our six refineries, which are in a state of ruin because of [the government's] technical incapacity, corruption and the lack of a sense of ownership. We used to be self-sufficient in [natural] gas and gasoline. But after the energy reform, the government took a bet on gasoline imports. This is why it stopped investing in and abandoned the country's refining sector.

You say you want to build new refineries. How would you fund them?

First, we need to [win the election], to see how Pemex's finances look. Pemex faces a very aggressive fiscal regime that we need to change. It gave the finance ministry 110pc of its profits last year. For a refinery, you can get financing from international banks. They can also be built using public money, or a public-private agreement. But that is something we will decide if we win, after we know how much [money] we have. Pemex was given a 50bn peso ($2.65bn) budget for its refineries this year, a lot of which went to absurd projects instead of maintenance. There will certainly be a radical change in the organisation of Pemex in terms of its priorities, its expenses and its waste.

Is unconventional development something you would pursue in government?

We need to find a balance when it comes to shale gas. Shale wells are exhausted very quickly and what you leave behind can have a great environmental impact. We are not against it. We will look into it if we need gas. We are at present severely dependent on the US. But the US has very low gas prices and we also need to take advantage of that.


Mexico oil output