Brokers

Last week, Financial Times put out an article about the impact that last week’s reforms of Mexico’s oil industry may have on investment:

The head of Mexico’s state oil monopoly expects the energy reform announced this week to boost oil investment by $10bn a year, even though the foreign companies that it hopes to attract will not be able to book reserves.

“To hit production forecasts of another 1 million barrels a day, we expect an extra $10bn a year until 2025,” Emilio Lozoya, chief executive of Pemex, said. “Some of that extra investment will come from foreign companies, some from Pemex,” he told the FT in an exclusive telephone interview.

While Enrique Peña Nieto, the president, is in charge of handling the delicate politics of the reform, Mr Lozoya is at the operational hard-end.

It is a formidable task. Pemex, the world’s 10th-biggest oil producer, has over $127bn of revenues a year but also 160,000 employees, a powerful union, pays virtually all its profits to the government in taxes and has onerous pension obligations equivalent to 8 per cent of the Mexican gross domestic product.

“It’s very exciting,” says the former corporate turnround specialist, apparently undaunted. “In terms of structure, Pemex is going to be like any international oil company, with streamlined operations and high efficiency.”

(Read the whole article here.)

-by Thomas Lloyd