Economics: Pemex retreats to a closed model
Pemex recently made good on a longstanding promise to deliver its new five-year business plan, which covers most of the six-year term of office of President Andrés Manuel López Obrador. The administration had been offering previews of some of the plan’s features in recent months as it tested the waters for its new approach to the state-owned oil company, but none of those managed to satisfy financial and economic analysts or industry specialists. Now that the entire plan has seen the light of day, the response has been similarly underwhelming.
Admittedly, the document checks all the boxes of what a Pemex business plan is legally obligated to address, and its diagnostic of the company’s operating and financial situation, as well as its main strategic and commercial risk scenarios, all seem reasonable. But it suffers from a clear disconnect between the conclusions of the diagnostic and the sorts of activities it proposes the company undertake, and the causal diagnostic–actions relationship is only realized at the most general level, not in relation to specific activities.
The most significant strategies raise numerous doubts, such as when they fail to offer anything specific after generically affirming a strategic need to attract private investment, and the plan contains many things that are likely to dissuade investors. The strategic commitment to "not increase net debt in real terms" simply condemns the company to finance its capital expenditure needs.
In fact, many of the strategies are no more than a list of good intentions, which, while correctly targeted, do nothing to assuage the fact that they form part of the strategic vision of a Pemex tasked with doing practically everything and only turning to service contracts with private parties to deal with some of the extras.
At its core, the plan confirms the abandonment of the “open model” Mexico began to embrace in the early 1990s, which was consolidated in the 2013 energy reform. In its place, we see a return to the old model so dear to AMLO’s heart of an essentially closed sector in which Pemex is to resume its central role in developing Mexico’s hydrocarbon sector while apparently depriving it of the necessary means to do so.
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