Privatization - Mexico - Low oil prices may push Pemex reforms - analyst

By James Fredrick?/?Business News Americas

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Slumping oil prices may force Mexico's new government headed by Enrique Pe?a Nieto to prioritize energy reforms, Eurasia Group analyst Carlos Ram?rez told BNamericas.

Mexican crude oil basket prices as reported by Pemex were down slightly this week, opening at US$92.18/b on Friday. These are well below the US$104.83/b registered this time last year, though up from the US$90.76/b reported a month ago.

Ram?rez says Mexico in general, not only Pemex, suffers from low oil prices. Lower revenues at Pemex are passed on to the government, which relies on the NOC for 30-35% of its annual budget.

"In recent years, the government hasn't suffered much from lower oil production because prices were relatively high," Ramirez explains.

Pemex's production has been declining steadily since 2004 when production hit 3.38Mb/d, due to slowing production at the giant Cantarell field. Average production throughout 2011 was 2.55Mb/d.

"Most recognize that Pemex is unsustainable in the medium and long term, but in the short term, think it's ok," Ram?rez said.

Lower oil prices, and consequently, lower government revenues may make politicians reconsider their assessment, the analyst added, providing a sense of urgency to push reforms forward.

"We aren't sure if Pemex reforms are a priority for [President-elect Enrique] Pe?a Nieto. Lower oil prices may make them a priority," Ramirez said.

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Source: http://member.bnamericas.com/news/privatization/low-oil-prices-may-push-pemex-reforms-analyst

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