Mexico May Privatize Oil

By Michel Marizco, KJZZ News for Fronteras

TUCSON – Mexico may be reforming its closely guarded oil industry laws by allowing more private investment.  That is welcome news to US businesses.

PEMEX has long been criticized for stifling its own development by keeping investors mostly out of the Mexican oil business.  That may be about to change.  The country is expected to rewrite its laws as early as this Sunday to allow more private involvement.  Carl Meacham is director of the Americas program at the Center for Strategic and International Studies.  He expects American investors will rush in if the changes come through.

CARL MEACHAM:  “I think they’ll be interested but I think there will be international oil companies from all over the world trying to get in on it.”

Other analysts warn not to go rushing into Mexico just yet.  Diana Negroponte is an energy and Mexico expert with the Brookings Institution.  She said that someone within President Enrique Peña Nieto’s party, the PRI, quietly released the report just days before a crucial internal party meeting that takes place in Mexico every three years.

DIANA NEGROPNTE:  “I would go far as to say there is key discussion on both energy and tax issues within the PRI as it approaches a critical weekend meeting.”

In other words, the leak could be a matter of internal political pressures.  The proposal has already shifted some economic thinking about Mexico.  Moody’s Investors Services reported the privatizing would help lift the country’s credit rating.  Mexico’s oil industry makes up a full one third of the country’s budget.