Arguments for amending Article 27 and for a Pemex 2.0

The Mexico City daily REFORMA on October 24 published an article that had been submitted by George Baker on two aspects of energy reform. The principal arguments are these:

1. The government’s intent in proposing to modify Article 27 is to restrict its scope to petroleum in-situ, thus placing the responsibility in the hands of the Congress and the Executive to devise the most appropriate manner of its exploitation. Both the PAN and the PRI, without saying so directly, regard the restrictions in Article 6 of the Petroleum Law of 1958 as unconstitutional.

Once Article 27 has been cleaned up, removing the extraneous matter inserted in the amendments of 1960, it will be clear that petroleum-in situ belongs to the Nation; and it will be the responsibility of the Congress and the Executive to devise the appropriate oil regime that responds to changing technology and market conditions.

2. For a new Oil Regime to prosper, the government must create a Pemex 2.0 as a state-majority, mixed capital enterprise that issues common stock. Otherwise, any expectation that IOCs will welcome Pemex as an equity partner in Mexico or beyond will not be fulfilled.

The website of REFORMA requires a subscription; but public-access extracts have been posted on the web portal (link below).

Written by

Mexico Energy Intelligence

Baker & Associates offers niche-market business and policy intelligence related to Mexico's oil and gas, power and chemical industries. Over 1,000 reports have been issued in the last 20 years. Subject matter expert and publisher George Baker, who directs the firm, has carried out consulting assignments starting in the late 1970s at the height of the Oil Boom in Mexico. He brings bilingual and bicultural skill-sets to understanding and responding to challenges of business and public policy, coupled with a deep familiarity with the history and idiosyncrasies of the Mexican operating environment.