PRI Chairman Appointed Energy Minister: the Antecedents

Pedro Joaquin Coldwell, who had been chairman of the PRI, has been named the energy minister in the new government led by Enrique Peña Nieto.

There is precedent for a former PRI chairman to be named as Mexico’s energy minister.

On December 1, 1994, President Ernesto Zedillo named Ignacio Pichardo, the former head of the PRI, as Mexico’s energy minister.

There is precedent for a former PRI chairman to be named as Mexico’s energy minister.

Pichardo soon entered into conversations with representatives of Canadian Hunter and Conoco for the purpose of developing the Burgos Basin on a sole-source basis. Compensation would be cost-plus-fee (like a rate-based utility). The lead Mexican consultant for this effort was Luis Ramírez Corzo, who, seven years later, would be named as the first director general of Pemex E&P in the Fox administration. In 2003, he was elevated to become the Director General of Petróleos Mexicanos; and his director of planning, Carlos Morales, would take his place, first on an interim basis (for 18 months), then with a permanent appointment.

Under Ramírez Corzo, the first of the upstream (farm-in-like) contracts were issued: they were similar to what Hunter and Conoco had originally proposed in the respect that the contractor would be paid on an item-by-item basis, but with the difference that Pemex would set the price of each item (and bidders would offer a discount against the price list). This contract model was modified in 2010 in a second round of public tenders: the concept of a price list was dropped in favor of a fee/barrel.

After a year in office, for reasons never made clear, Pichardo was sent to Denmark as ambassador (He later wrote a political memoir, but he left out his time as energy secretary).

In early January, 1996, the Wall Street Journal published a note about Conoco’s proposal for the Burgos Basin (I have the clipping in the archives, but now don’t find the article on the Internet). Reyes Heroles, who had just come into office, denied any knowledge of such a proposal, and the matter died (but not without some embarrassment, as the discussions with Pichardo had not included representatives of Pemex).

Jesús Reyes Heroles, a son of a former director general of Pemex, then came in as Energy Minister. Reyes Heroles tried, but failed, to privatize Pemex’s chemical plants; and after two years he also was sent out of the country as ambassador (to the U.S.). The third energy minister was Luis Téllez who tried (nobly) but failed to get traction on Zedillo’s proposal to restructure of 1999 to the electric sector.

Looking back, the appointment of a PRI chairman to be energy minister now looks like a compromise candidate who was to serve as a place-holder until the emotions and tempers died down. Pichardo did more than was expected, as he set in motion the ideas and people that would much later go far toward developing Mexico’s natural gas production.

I met with Pichardo privately in December of 1995, and expressed my concern that not enough was being done to raise natural gas production. “You needn’t worry,” he replied, somewhat mysteriously, “I’ve received a proposal that I believe meets all constitutional requirements and that will allow for the development of gas basins in Mexico by private companies.” He did not mention the names of Canadian Hunter or Conoco. I do not recall if he named the Burgos Basin.

Private meeting with Pichardo in December 1995.

I asked him if he would consider a subscription to MEXICO ENERGY INTELLIGENCE. He replied, “Yes, certainly, provided that I’m still here as Energy Minister.” Three weeks later he was gone.

Eighteen years later, the SENER has yet to commit to receiving our reports on a commercial basis (informal copies at no cost are OK). Our reports would provide officials with an international “refresh button” for their perceptions of how international observers see and understand Mexico’s energy policies and institutions.

Our Market Note 149 (WHAT SHOULD SENER TELL THE NEXT GOVERNMENT?) would offer ideas to keep the new secretary busy, at least for a year.

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.