There’s a lot of interest in Mexico’s state-owned oil giant, Pemex, these days.
It’s getting talked about on the snowy slopes surrounding Davos, Switzerland, where the World Economic Forum is taking place.
The focus is on how Mexico will open up its oil industry to foreign investment, fulfilling a promise of President Enrique Pena Nieto before his inauguration last month. Both Pemex President Emilio Lozoya and Finance Secretary Luis Videgaray have talked about Pemex in public forums in Davos.
Videgaray said an energy reform would occur later this year despite opposition.
"It will not be easy to make but the need is there, the conditions are there and the opportunity is there,” he said, according to this report, noting that the government would “change the legal framework” around oil exploration and production.
Lozoya, for his part, seemed to be playing to the gallery back in Mexico, declaring that Pemex “will remain a public entity and oil resources will remain the property of the nation,” according to a blog on the website of Pena Nieto’s office.
Energy reform, crucial to increasing Mexican oil production, is not easy. It would require approval in both chambers of Congress and by more than half of the state legislatures.
The Eurasia Group consultancy in New York issued a report this morning saying that energy reform is finding opposition across the political spectrum, and won’t come up until “easier” reforms on telecommunications are debated and approved, showing the government can still maintain a consensus with the opposition.
“The fact that Pena Nieto is … delaying major reforms for the second half of the year suggests that approval will be difficult, and that he currently lacks the necessary support. Still, it seems unlikely that he would narrow down the scope of these reforms just for the sake of consensus, as some analysts now fear, having made such explicit promises (especially a constitutional reform on energy) and raised expectations.”
But there is certainly enthusiasm abroad for any possible opening of Pemex, which offered $2 billion of 10-year bonds on the international market this week.
A columnist for El Economista, Marco A. Mares, noted that the issuance was 4.3 times oversubscribed.
“And what do you think happened, my dear reader? The market devoured the paper …” he wrote.