Pemex CEO wants to make the Gulf great again.
CEO praises profit and foreign partnerships
Pemex wants to make the Gulf of Mexico great again.
With the offshore oil industry floundering throughout much of the world, state-owned Petróleos Mexicanos, known as Pemex, is ready to invest in the deep-water Gulf again now that it is bringing in foreign investors and partners for the first time in its 80-year history. But that investment will only come if market reforms that are undoing Pemex’s monopoly continue to advance, said Pemex CEO José Antonio González Anaya, speaking Wednesday at the Offshore Technology Conference in Houston.
“We could not finance it on our own,” González Anaya said. “We did not have the technology to do it on our own.”
Pemex signed its first such partnership in March with Australia-based BHP Billiton to develop the Trion field in the southern Gulf of Mexico. Pemex will only own 40 percent of the project.
Mexico in 2013 began implementing constitutional changes to undo the 75-year-old Pemex monopoly and to invite foreign investments into its antiquated oil and gas industry. Mexico’s crude oil production had fallen for almost a decade, and the country was facing shortages in fuel and electricity generation as it struggled to keep pace with population and economic growth.
The energy reforms, however, came just as the two-year oil bust arrived, leading to Mexico’s government slashing Pemex’s budget by nearly 50 percent over the last three years. González Anaya, a Harvard-educated finance expert who had served on the Pemex board, was appointed CEO early last year — to make Pemex profitable and to advance the reforms.
Profitability now is the
primary guiding principle for Pemex, which Wednesday announced its biggest quarterly profit — $4.7 billion — in five years.
“That may seem obvious to you, but it wasn’t obvious before,” González Anaya said. “I think we can say Pemex has stable finances — improvable but stable. We couldn’t say this a year ago.”
Mexico has relied for many years on plentiful oil from its offshore Cantarell field, but the production there is on the decline, and Pemex will need to spend a lot to develop other oil and gas resources. The natural resources are bountiful, but increasingly oil industry partners from the U.S. and other countries will be needed, González Anaya said.
“Nature was generous with Mexico, but it wasn’t eternal,” he said. “We have to invest a lot more to get the oil out like everybody else.”
It’s not just offshore where Pemex needs foreign investment, he added. The company also needs pipelines, refineries and storage.
That’s why Pemex this week awarded San Antonio-based Tesoro with a contract to provide petroleum transportation and storage to northwestern Mexico. González Anaya said these types of deals will help Mexico while still maintaining Pemex’s identity as the national oil company.
“We have the opportunity to modernize ourselves and maintain our position as Mexico’s emblematic company,” he said. “I would like to go faster, but we’re going as fast as we can.”