News Commentary

Other than Adrián Lajous, Gustavo Hernández may be the only Pemex executive whose professional beginnings were in an institution of public policy and oversight. There is a biography of him in Wikipedia: His position as director general in Pemex Exploración y Producción (PEP) is currently a temporary appointment (Carlos Morales held a temporary appointment for some 15 months before he was permanently appointed; previously, like Gustavo Hernández, he was Deputy Director for Planning.

The timing of the resignation of Carlos Morales, after 10 years in the most important job in Pemex, may be linked to other developments: the resignation of Francisco Rojas from CFE; the lateral movement in SENER of Lourdes Melgar to the position of Deputy Secretary for Oil Policy; the replacement of Rojas by Enrique Ochoa Reza, who vacated the office into which Dr. Melgar will move; and the preparation of the list of fields and prospective acreage that Pemex will submit on March 21, or sooner, in Round Zero of the Energy Reform.

Under the leadership of Carlos Morales,

  1. Pemex’s upstream business unit (PEP) consistently challenged the authority of the Hydrocarbons Commission (CNH) when it came into operations in 2009. The relationship between PEP and CNH will become even more important as the mandate of the CNH is to be expanded considerably under in the implementing legislation of the 2013 Energy Reform.  From the government’s perspective, it is essential to have a DG of Pemex E&P that will support the energy reform and that will work cooperatively with the CNH.
  2. A new contractual model for upstream contractor-operators was launched in August of 2011. It was the first implementation of the Special Procurement Guidelines of 2009 (which, in turn, had been mandated by the new Pemex Law of 2008).
  3. Chicontepec was promoted as a field with upwards of 200,000 b/d (as high as 500,000), with billions of investment dollars in wells that did not pay for themselves in oil production.
  4. An innovative concept of “laboratory” was launched in Chicontepec with service companies being given the mandate to devise new technologies and techniques.
  5. PEP made commercial discoveries in the Mexican Perdido, over-riding CNH’s initial objections to exploratory drilling in ultra-deep waters.
  6. PEP’s capex would nearly double, to some US$22 billion from $12 billion a decade earlier, but oil and gas production would fall by a quarter.
  7. PEP would have a booth at the Offshore Technology Conference (OTC) in Houston. (For 2014, a Mexico Pavilion is being planned.)

What is awkward in the close of the tenure of Carlos Morales in PEP is the detail that his departure was announced as a “resignation” that was “accepted” by the Director General of Petróleos Mexicanos. Knowing that every analyst and media commentator will suspect that his departure was forced (but without specifying the reasons), for Pemex it would have been a face-saving arrangement for both sides to have announced his retirement, to which, by his seniority, he was entitled. Announcing that he “resigned” will provoke many more questions that an announcement of a “retirement.”


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.