The Greenspan game plan was echoed December 13th in a memo issued by the International Monetary Fund urgently counseling legislation to allow private capital into PEMEX before the government went broke. Garza's embassy chimed in the next day, warning of massive capital flight if the Mexican Congress did not pass Calderon's "energy reform" package. On December 19th, The Economist, which ironically was founded on the fortune reaped by Anglo oil companies in Mexico that eventually became British Petroleum, opined that "the obvious solution to the disaster of PEMEX is to privatize." Finally, the U.S. Department of Energy delivered the death knell on January 9th: the lack of investment in PEMEX's Exploration and Exploitation (PEP) division spelled energy catastrophe - not a good sign for Washington's North American Energy Alliance strategy. On January 10th, the PRI came on board to back Calderon's "energy reform."
Despite the Jeremiads, the putsch for privatization has lost considerable steam globally. In fact, a moderate swing to nationalization seems to be in process. Amidst prognoses of irreparable damage to the Venezuelan economy, Hugo Chavez renationalized sectors of PDVSA, the state oil company, and ran a 12% surge in domestic growth in 2007 in spite of it. Bolivia has renationalized natural gas production and Ecuador is on the brink of doing so. The most successful renationalization has been in Putin's Russia where Gazoprom and Yukos became major world players overnight.
According to Mexican strategic resource writer Alfredo Jalife, 32% of the world's petroleum supply is in the hands of private transnationals, 20% is nationalized or in the process of being renationalized, and the rest is held by mixed state-private corporations.
But despite their exaggerated anguish at an energy meltdown if PEMEX is not privatized, the doomsayers do have a point: Petrolios Mexicanos is in deep doo-doo. Daily accidents such as the unquenchable fire that took 21 workers' lives on a Caribbean oil platform and contaminated surrounding waters last fall, pipeline bombings by the guerrilla Popular Revolutionary Army, and the failure to modernize infrastructure - no new refinery has been built in 20 years - is stark evidence of corporate corrosion.
Despite 100-weak-dollar-a-barrel prices (Mexican light crude tops out around $80 USD these days) that generated $2.3 billion in enhanced revenues during the first ten months of 2007, lack of refining capacity forces PEMEX to shell out $5 billion Yanqui dollars each year to import 40% of its gasoline needs - which is to say that for every $1 of the increased revenues PEMEX takes in, two bucks go out for gas.
Calderon's solution? The so-called "Gasolinazo", the President's gift to the driving public on January 6th, the Day of the Kings (Mexican Christmas), that will increase prices at the pump incrementally each month indefinitely. Increased transportation costs are expected to impact food prices across the board.
But the bad news doesn't stop there. The big battle over Mexican oil is really a battle over crumbs. If U.S. Department of Energy calculations are on target, Mexico only has 12.9 billion barrels in proven reserves, depletion of which could turn PEMEX into a net importer by 2018 if no new petroleum sources are uncorked before then - although Mexico is the sixth largest international oil producer, it has only 1% of the planet's proven reserves.
With the Cantarell field in the Sound of Campeche, the magnum star of offshore production that has motored PEMEX since the 1990s, just about tapped out, the clock is ticking.