A Neo-Con (Neo-Liberal) Agenda for Mexican Oil

We’re scrolling through the MEXUS Compact on Competitiveness, when zingo, up comes the subhead “Energy Security”. Oh boy, here we go again. Don’t forget to check out the “leadership” list at the end:

With the fourth largest crude oil reserves in the Western Hemisphere, Mexico nonetheless imported $2.4 billion of gasoline and $1.5 billion of natural gas in 2003. This staggering reality, the result of Constitutional requirements that restrict foreign investment in the hydrocarbons sector, was exacerbated in 2004 by higher import volumes and
international prices.
As a result, Mexico’s energy sector, central to the country’s economy and a legitimate source of national pride, faces the challenge within the framework of its Constitution of drawing substantial foreign investment flows to modernize, expand, and improve production.

Increased production would help Mexico meet its growing domestic demand for energy, while allowing increased exports to augment the inflow of revenues
and to realize corresponding benefits. Without making conditions more attractive for private investors in the near term, PEMEX, Mexico’s national oil company will be unable to sustain its role as the primary underwriter of Mexico’s annual budgetary needs over
time.

Additionally, unless Mexico finds cost-effective means to raise production, overall security and competitiveness within North America will be impacted.

From the MEXUS “Compact on Competitiveness”

The business community respects and deeply appreciates the political sensitivities toward private investment in the Mexican state-owned energy sector, even as we believe that Mexico would greatly benefit by liberalizing its energy sector.

By partnering with US and Canadian energy companies, Mexico can position itself to meet domestic demand as well as increase its reserves and revenues while contributing to growth in energy dependent sectors.

US and Canadian energy companies are interested in becoming actively engaged in Mexico’s energy market and are willing to invest much needed financial, management, and technological resources to increase energy availability and efficiency in North America.

Specifically, recent claims to vast deepwater oil reserves in the Gulf of Mexico could be a boost to the country’s total energy output and national income. Tapping into these new sources, however, will require Mexican Congressional
approval and increased cooperation with foreign companies that have the technical and financial strength required to undergo such complicated explorations. Without such cooperation, Mexico will be unable to reap the full benefits of deep-water drilling in the Gulf of Mexico.

As well, US and Canadian companies tend to promote a culture of philanthropy including support for schools, hospitals, and the arts that would bring benefits to Mexico beyond sector-specific investments. The first step would be to create an appropriate investment framework to allow for such foreign investment on market terms.

Appendix I
US-Council, MEXUS Leadership Team

ChevronTexaco Corporation
Eastman Kodak Company
First Data Corporation
Ford Motor Company
Kissinger McLarty Associates
Manatt Jones Global Strategies
Merck & Company
MetLife
Miller & Chevalier Chartered
Nextel International/NII Holdings
The Procter & Gamble Company

The views expressed in this report are the collective opinions of individuals representing companies
associated with the US-Mexico Business Committee and/or the Council of the Americas. They are not
necessarily the views of the companies themselves.

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