Mexico City – President Felipe Calderon said Mexico needs more far-reaching reform of its oil sector and pointed to the "fundamental change" that Brazilian state-controlled energy giant Petrobras underwent more than 10 years ago.
Calderon said at the close of a business conference in the central city of Queretaro that Brazil has gone through "many changes" but "an essential one was when (then-) President Fernando Henrique Cardoso, at the end of the 1990s, decided to change Petrobras."
The Brazilian company was an entirely state-owned enterprise, "very difficult to manage, very unproductive," Calderon said in drawing a parallel between Petrobras' former structure and the current situation at Mexican state oil monopoly Petroleos Mexicanos, or Pemex.
Reforming Petrobras meant raising capital by freely floating a proportion of its shares and allowing joint ventures with companies with specialized knowledge of the industry, among other measures.
"And the truth is that today Petrobras has almost quadrupled its oil production, while Mexico's (output) has declined," Calderon said Tuesday.
Petrobras, founded in 1953, began taking its place as one of the world's leading energy players after 1997, when the government ended the company's monopoly on the exploration, production, refining, transportation, and import/export of hydrocarbons in Brazil.
The company, now known as a world leader in deep-water exploration, also has made several recent massive oil discoveries in the vast, ultra-deep pre-salt region, which could hold upwards of 80 billion barrels of oil equivalent.
While a recent Brazilian law mandates that Petrobras be the lead operator in all of the pre-salt fields and have a minimum 30 percent stake in any consortium formed the develop them, foreign oil companies also will participate - under production-sharing agreements - in the technically complex and highly expensive task of developing those reserves.
By contrast, Calderon said Mexico has only partially approved a series of initiatives proposed by his conservative government to increase oil output, which had been falling steadily for several years due to the natural decline of the supergiant Cantarell field before stabilizing recently.
He said the reforms thus far, including allowing foreign companies to operate oil fields under incentive-based service contracts, do not address the "essential" factors stymieing Pemex's potential.
He noted, for example, that Pemex still cannot form strategic associations with "Petrobras or other companies to produce oil and gas," to refine extracted crude or even for the construction of pipelines to transport gasoline.
The president therefore called on lawmakers and political leaders in Mexico to translate their "good intentions" into concrete actions to bolster the country's energy sector.
"Mexico is not optimizing its energy potential in oil, gas and electricity," according to Calderon, who called for the need to achieve harmony between the public and private sectors.
Mexico also wants to follow Brazil's lead in maximizing the potential of its offshore reserves.
But while the offshore fields Pemex currently is developing - including Cantarell and its current largest field, Ku-Maloob-Zaap - are located in shallow waters and easily accessible, experts say future finds will have to come from much more technologically complex operations in deep waters of the Gulf of Mexico.
Calderon's remarks came after different opposition leaders expressed support for reforms to make Pemex more efficient.
On Tuesday, the chairman of the main opposition Institutional Revolutionary Party, or PRI, Humberto Moreira, said he favored allowing private investment in oil exploration in Mexico as a means of fighting poverty.
"There's poverty above and wealth below. There's wealth below that hasn't been able to be extracted due to lack of funding, due to lack of technology," Moreira, whose party is favored to recapture the presidency in the July 1, 2012, elections, said.
Moreira added that Mexico could be much more competitive with more investment in the energy sector and noted that, while the oil will "continue to belong to Mexicans," the possibility of forging alliances between Pemex and other companies to develop crude reserves must be considered.
"We see the experience of Brazil that has been successful" but which Mexico has not yet emulated, the PRI chairman said.
Created after President Lazaro Cardenas nationalized Mexico's oil industry in 1938, Pemex currently produces roughly 2.6 million barrels per day.
The state oil monopoly is the largest contributor to Mexico's federal budget and one of the only oil companies worldwide that handles all aspects of the productive chain, from exploration to distribution and the marketing of end products.
The company has been treated as a cash cow by successive governments, especially during the 71-year reign of the PRI, which channeled tens of millions of dollars in Pemex funds to its failed 2000 presidential campaign.