As in Mexico, Brazil’s oil sector development is closely linked to the country’s economic growth. President Calderón, speaking last week in Queretaro, raised the issue of Brazil, and how a turnaround in its oil industry regulation was one of the key events in the development of the country into the economic superpower it is today. Calderón then went on to compare Petrobras with Pemex, praising Petrobras and the Brazilian government for initiating reforms such as allowing Petrobras to float some of its shares and allowing JVs with companies to capitalize on their deepwater expertise. Calderón compared the success of this reform with that of Mexico’s, which he believes has not yet addressed the critical factors necessary for a full turnaround of the oil sector; whilst Petrobras has almost quadrupled its oil production since introducing their reforms, Pemex’s production levels have declined.
Interestingly, more players have come forward this week to comment on Pemex and Petrobras. First, the forerunner in the Mexican 2012 presidential race, Enrique Peña Nieto, said that if he won the election, he would take steps to make Pemex more closely resemble Petrobras. Then former Brazilian President Luiz Inacio Lula da Silva commented on the issue. Interestingly, the point he made was that Pemex and Petrobras have always had confidence issues in cooperating with one another, and that this was an issue that the former President raised both with Vicente Fox and Felipe Calderón.
Lula da Silva suggested the creation of a joint venture between Pemex and Petrobras to create a third company to exploit new markets and develop and invest in new technology. He also suggested that Mexico should start to look more to its southern neighbours, following the Brazilian strategy of increasing trade throughout Latin America, Asia and Africa.
The final comment on this subject came from a press release from Pemex in response to Lula da Silva’s comments, saying that future collaboration with Petrobras was ‘desirable’. The figure quoted in the press release is Fluvio Ruiz Alarcon, one of Pemex’s four ‘professional’ board members brought in after the 2008 energy reform. Reminding those reading the press release that joint ventures in international markets was not forbidden by the Mexican constitution (only collaborations on Mexican soil are banned), he said that Lula da Silva’s suggestion for a third vehicle to be created was one of a number of possible methods for cooperation, saying that increasing activities with Petrobras was possible and desirable from Pemex’s perspective.
Many pointed to the Repsol share acquisition as one way in which Pemex might start to acquire the technology and expertise necessary to exploit its reserves in deepwater. However, collaboration with Petrobras should also go a long way to helping the company acquire this expertise; since opening up its own oil sector, Brazil has done an excellent job in technology development in recent years (with an investment budget of more than double Pemex’s current allowance from the Mexican government). But Pemex will need to be careful to ensure that it has the political capital to secure such a deal; after Pemex invested in Repsol shares one of the biggest criticisms levied at the company was that it was spending money that should be spent on the domestic industry on international flights of fancy. However, judging by this week’s comments, it seems that political consensus seems to be building around the idea of an international move with a fellow Latin American player.