With Patrick Crow
from Washington, D.C.
Mexico, Brazil, and Bolivia took steps last week to continue opening their oil industries to foreign firms.
President Ernesto Zedillo announced a plan that calls for nearly $34 billion of investments in the Mexican energy sector by 2000, including $6 billion from the private sector.
Zedillo said the goal is to increase oil and gas production to generate more foreign exchange, produce cleaner fuels, and encourage more private investment.
The plan forecasts oil production will rise from 2.73 million b/d in 1995 to 3.09 million by 2000. That will leave 1.7 million available for export, compared with 1.3 million b/d in 1995. Meantime, gas production will rise from 3.83 bcfd to more than 5 bcfd, but almost all will be consumed in Mexico.
Energy Sec. Jesus Reyes Heroles, who took office in December, responded to recent demonstrations by oil workers with a pledge that Mexico will not privatize the "strategically important" operations of state owned Petroleos Mexicanos (Pemex). But he said Pemex will seek ways to encourage private investment within the current legal framework.
The plan affirmed the government's commitment to privatize 61 Pemex petrochemical plants, as well as some natural gas transportation and distribution activities.
Mexico is accepting bids for 10 secondary petrochemical complexes and is offering concessions for gas businesses. Three bids have been received for the Cosoleacaque petrochemical complex.
Brazil
Last November, Brazil amended its constitution to end Petrobras' 40 year monopoly.
The action required Congress to regulate the newly competitive oil market. Last week Energy Minister Raimundo Britto said a draft bill will go to Congress in March. The bill would establish a federal commission to grant concessions for operations in most industry sectors.
Petrobras must compete with private firms for those concessions but may form joint ventures with them. It will retain the rights to fields it now operates.
A key issue for Congress is how much foreign participation to allow. Some lawmakers want to limit foreign firms to 49% ownership of companies.
Bolivia
In the last 8 months, Bolivia's privatization program has sold half interests in the state owned telephone, electricity, railroad, and airline companies.
Most controversial is the government's proposal to split YPFB, the state oil company, into exploration and production, transportation, refining, and marketing companies and sell controlling interests in them to private firms. Proceeds would be reinvested in the Bolivian firms.
The government says privatization is the best way to spur economic growth and provide investment money for projects such as the gas export pipeline to Brazil.
The issue is highly contentious because YPFB provides half of the Bolivian government's revenues. Some lawmakers warn that the country will be crippled if the capitalization program falters and have delayed a law allowing the sale. Oil workers, fearing layoffs, have threatened strikes.
Government officials last week said they expect the YPFB sale, originally planned for last December, to be held by June.
Copyright 1996 Oil & Gas Journal. All Rights Reserved.
