海角大神

An oil industry overhaul approved by Mexico's Congress portends massive changes for the country's iconic national oil industry 鈥� and potentially a boost for the economy.

The bill, approved overnight, would promote foreign investment and allow private companies to explore and exploit petroleum deposits 鈥撀爐asks previously reserved for Petr贸leos Mexicanos, or Pemex, as the state oil agency is known. It must be ratified by state assemblies, approval that is expected.聽

Energy reform has been enthusiastically supported by international investors and Mexico鈥檚 business class, who are expected to sink billions into an industry lacking the capital and outside expertise to develop promising shale gas projects and drill in the deep waters of the Gulf of Mexico.聽President Enrique Pe帽a Nieto argues the reform will lead to lower prices for ordinary Mexicans, create jobs, and reverse declines in Mexico鈥檚 dwindling reserves 鈥撀燼ll while keeping state control over the petroleum.

But 聽opponents, including former presidential candidate Andr茅s Manuel L贸pez Obrador, call the measure 鈥渢reasonous,鈥� as state ownership of oil has come to symbolize sovereignty and self-respect for many Mexicans, who consider oil nationalization in 1938 a seminal moment in making the modern Mexico. Stories of past privatizations as failing to provide promised improvements pose a further challenge to acceptance.

鈥淭here鈥檚 this experience that private players end up being as bad or corrupt as the public sector,鈥� says Aldo Mu帽oz Armenta, political science professor at the Autonomous University of Mexico State.

Boosting coffers

President Pe帽a Nieto says his reform 鈥� which his own party repeatedly torpedoed during a dozen years in opposition 鈥� isn鈥檛 privatization, and will boost oil output from 2.5 million barrels per day to 3.5 million barrels per day. Money from the sales will also improve public finances, he says, since oil income accounts for approximately one-third of the federal budget.

The plan removes restrictions on the ability of companies other than Pemex to participate in areas such as exploration, production, pipelines, and refining.

The new arrangement, says George Baker, a longtime Mexican oil industry analyst, offers the government flexibility to adapt to changing technology and market conditions. It also starts to change the 鈥渘arrative鈥� on how the industry in Mexico is operated.

鈥淢exicans for 70 years have thought that the way you manage an oil industry is that you have a bunch of commercial restrictions in the Constitution,鈥� Mr. Baker says.

Skeptical public

But on the streets, the view is more skeptical. Shopkeeper Rodolfo Villanueva looks to the recent past 鈥� the 1990 privatization of the state telephone monopoly Tel茅fonos de M茅xico 鈥撀燼nd suspects history is repeating itself.

鈥淚s the same thing going to happen there as in Telmex?鈥� asks Mr. Villanueva, who points out that a privatized Telmex 鈥減roduced the world鈥檚 richest man鈥� 鈥� Carlos Slim Hel煤, who made monopoly rents from his telecommunications empire in a country where half the population lives in poverty.

Allegations of cronyism and corruption in the awarding of Pemex contracts only deepen the distrust. So do suspicions that the supposed benefits of energy reform are being oversold by the president and his Institutional Revolutionary Party (PRI) 鈥撀爅ust as many suspected under previous administrations, which advocated for privatization of more than 1,000 state-run businesses and the signing of NAFTA two decades earlier.

Professor Mu帽oz reels off a list of sectors with poor track records of performance and service. He says that banks, which privatized in the 1990s, lend little, charge high commissions, and send big profits to their struggling parent companies in other countries.

Telmex has improved its service and expanded its network since being privatized, Mu帽oz acknowledges, but, he argues, 鈥淲hat we get used to is going from a bad service to one that鈥檚 less bad,鈥� while competitors seldom exceed expectations.

Even Pemex service stations 鈥撀爋perated by private franchises 鈥撀爎egularly water down their gasoline and shortchange motorists by operating crooked gas pumps, according to consumer protection watchdog Profeco.

Weak rankings in public opinion

A Consulta Mitofsky poll ranked 鈥渂usinessmen鈥� 7th of 15 groups and institutions evaluated for 鈥渃onfidence鈥� in a 2012 survey 鈥撀爌lacing them ahead of the police and politicians, but behind the Catholic Church, military, and universities.

Part of that perception stems from history and attempts by the PRI in past years to vilify private enterprise.

鈥淭he old PRI regime had to have an enemy in which to base its legitimacy,鈥� says C茅sar Vel谩zquez Guadarrama, professor of public policy at the Iberoamerican University in Mexico City.

Still, some businessmen benefited. 鈥淭hrough corruption and protection鈥� 鈥撀燽y keeping borders closed, for example 鈥� 鈥渢he PRI regime created many millionaires,鈥� Mr. Vel谩zquez says.

Others say there鈥檚 less to worry about in terms of private participation and that times have changed to the point that the sale of Telmex to Mr. Slim 鈥� something deemed to have been done properly 鈥撀爓ould be carried out differently.

鈥淭he '80s and '90s were very different from today,鈥� says Manuel Molano, director of the Mexican Institute for Competitiveness think tank. 鈥淭here have been a lot of lessons learned by society and the market.鈥�