At the beginning of this week, it was reported by several media outlets that PEMEX had found a new deep-water oil field. It is estimated that the Exploratus-1 field can provide between 150 and 200 million barrels of crude oil, an amount that is quite low when considering the potential of Mexico in deep waters, thought to be of around 26 billion barrels (a sufficient quantity, given the current exploitation rate). One of the most powerful arguments in favor of opening up the oil sector was the incapacity of PEMEX to exploit such abundance at a competitive pace. Now that the Constitutional locks that prevented the participation of private companies in the oil industry have been opened it is worth asking if Mexico will take advantage or will end up, as it has previously occurred, abusing corruption and generating a less-than optimal repartition of its resources, in this case, the hydrocarbon exploitation. On the other hand, if finding this oil field turns out to be as a pressuring fact for not liberalizing the sector in the next legislative stage, the scenario would be even worse.
The energy reform will enable the flow of capital and investments for the country. Different estimates suggest that a good legislation on the aforementioned reform might translate into an additional Gross Domestic Product Increase of between 0.5 and 1%. Likewise, the announcement of the opening up of the sector has detonated a great amount of optimism throughout the financial world. The main indicator for it was the improvement in PEMEX credit rating. All of this represents additional resources, which will undoubtedly represent a great temptation for corruption and, thus, decision-making using wrong set of criteria. If PEMEX doesn’t manage to successfully adapt to the new market conditions, keeps on monopolizing the exploration and productions projects and does not assume policies that are grounded in productivity and competitiveness, the opening up might result counterproductive, at least for the company. There is also the opposite risk, of PEMEX giving away certain fields to private companies for considering them not profitable and will try to recover them later in unfavorable conditions. For instance, in Brazil, Petrobras let some important fields go to private companies that it later tried to recover using desperate measures such as buying stocks from those oil companies in order to manipulate administrative decisions that would favor it. In sum, there has to be a right balance between getting the best part of the deal without PEMEX falling into a monopolistic strategy and avoiding eventual abuses made by private companies.
The legislation of the energy reform ought to focus on creating an efficient regulatory framework. This will allow the Mexican State to be a guarantee that oil resources will be maximized for the benefit of all. Likewise, it is important that deep-water explorations are developed using the country’s engineering capacity, a clear way for added value. For instance, in Norway, the government managed to establish in the contracts that oil fields that had some sort of private participation should have some working staff of the State company Statoil, with the purpose of enriching its personnel’s learning techniques. Additionally, if new findings were made in these fields, the contract terms with the oil companies could be modified. The fact that a State oil company had the knowledge as how to exploit deep-water fields enabled private companies into agreeing terms with the State, resulting in a major benefit for the Norwegian population.
According to the established postulates of the reform, the Secretariat of Energy (SENER) will be the institution that will determine the distribution of exploration and exploitation contracts within the oil fields. The ideal scenario would be for SENER to employ criteria that would favor the maximization of oil wealth rather than enlarging its administrators’ pockets. Mexico should take advantage of its oil potential within deep-water rather than drown in the deep waters of corruption.
CIDAC
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