Since the new Energy Reform has been set on the table as a priority of Peña Nieto’s presidential term, Pemex’s restructure discussion is part of every debate. There are as many opinions about what has to be done, as there are people talking about it. However, there are two general views. The first one is defined by those who see it as the greatest opportunity to open Pemex to the private sector with fewer benefits for the nation; the second one represents those who suggest making the necessary adjustments to present attractive incentives for investment, without giving away the nation’s wealth. The major issue here is how to find the best way for the NOC to be able to develop and achieve higher goals, such as increase production, diversification of its strategy, new technology development, among many others.

Pemex, as the National Oil Company is an essential topic in all agendas and a really big concern because it is the base of the Mexican economy, providing one third of the total budget of the federal government. In 2012 Pemex paid to the Treasury 55 cents of each Mexican peso obtained by their operations.

Edificio de Pemex (Image courtesy from lahora.com.ec)

Edificio de Pemex (Image courtesy from lahora.com.ec)

In recent statements, Emilio Lozoya – CEO of Pemex – pointed out that Pemex is constituted by four subsidiaries (Exploration and Production, Refining, Gas and Basic Petrochemicals and Petrochemicals), each with a different management and supposedly independent corporate governance. Each subsidiary has a legal, financial and human resource department. This duplicates the support functions. Lozoya mentioned the need to encourage the culture of becoming one solid company again, centralizing all the processes to be less bureaucratic, more agile and faster, on the basis of acquiring a commercial vision and  be able to have a better response to the Mexican government. He believes that this could be easily done with an internal reform, a restructure and, eventually an Energy Reform, that allows the NOC to have more management autonomy.

This is an issue that concerns both debating parties. For Lozoya, it represents an opportunity to develop an attractive Energy Reform that promotes investment and, therefore, job creation. This opens the possibility of developing specific areas, such as deepwater, that has not been fully explored due to the lack of funding. Another important issue that the Energy Reform would bring is the much needed state-of-the-art technology required to explore other hydrocarbon alternatives that are part of Pemex’s diversification strategy.

The other debating side considers that, even though Pemex’s restructure is necessary, the NOC is not prepared to face the challenges that innovation and the technology requires. They are convinced it is very important to include a plan for long-term development, that have to consider the reincorporation of those students overseas that are part of the NOC’s training programs. One of the last, but most delicate aspects of restructure is staff movement. They defend the idea that a massive layoff is not necessary. The key is workers’ rotation which will improve their skills annd capabilities. However, they are aware of the necessity of eliminating those functions that are duplicated in each subsidiary.

In 2013 Pemex’s challenges are very significant because they determine the objectives that need to be achieved in order to maintain and increase production, accomplish a comprehensive Energy Reform and restructure, and display interesting contracts to acquire investment in different areas that have become essential parts of the Mexican economy.

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