Mexican Opposition Says Govt Squandered Oil Windfall EFE
go to original March 20, 2012

MEXICO CITY - Mexico's conservative government has squandered 1.7 trillion pesos ($134.9 billion) in windfall oil profits since December 2000, the legislative leader of the main opposition Institutional Revolutionary Party, or PRI, said on the 74th anniversary of the nationalization of the petroleum sector.

Francisco Rojas, a former head of state-owned Petroleos Mexicanos, described the policies of President Felipe Calderon and predecessor Vicente Fox, both of the National Action Party, as killing "the goose that lays the golden eggs."

Rojas, who ran Pemex from 1987-1994, said Sunday that under National Action, known as the PAN, oil revenues have been used to pay for current government spending rather than investment in development.

That approach, according to the PRI lawmaker, has also contributed to Pemex's precarious financial situation.

He accused PAN legislators of allowing the executive branch to ignore a 2006 measure that established formulas for distributing windfall oil profits with an eye toward insulating Mexico's public finances from oil-price fluctuations.

Instead of sticking to those formulas, the Calderon administration has tapped oil profits whenever tax revenues have fallen short, Rojas said.

Mexico's economy has grown an average of 1.9 percent a year since the PAN's Fox took office in December 2000 and half the population is living below the poverty line, Rojas said, vowing that a future PRI would administration will make Pemex an engine of development without relinquishing public control of the country's resources.

Speaking later Sunday at an official ceremony to mark the anniversary of the oil nationalization, Calderon said the biggest threat to Pemex's long-term financial health is labor costs, especially pensions.

He also said the PAN has boosted investment in Pemex from $5.3 billion in 2000 to $23.8 billion this year, making the Mexican oil industry "more efficient, more profitable, more competitive and more viable."

Pemex pumps 2.5 million barrels per day and is the world's fourth-largest oil producer.

At the close of 2010, Mexico's proved crude reserves totaled 10.16 billion barrels, while proved, probable and possible, or 3P, hydrocarbon reserves amounted to 43.07 billion barrels of oil equivalent.

Mexico's oil output totaled almost 3.4 million barrels per day in 2004, but has since fallen due to a sharp decline in production at offshore Cantarell, once the country's most productive field, and a lack of investment.

The PRI, which ruled Mexico without interruption from 1929 until Fox's victory at the polls in 2000, is favored to regain the presidency in this year's election.

Current and former Pemex employees say Mexican politicians have traditionally treated the state oil monopoly as a cash cow and that political considerations have taken precedence over good business practice in the management of the huge company.

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