Pemex to go international, create US company

Monday, August 19, 2013

In a bid to become a true international oil company, Mexico's national oil firm Pemex will create a subsidiary to operate in US shale and Gulf of Mexico deepwater plays.

In an interview with the Wall Street Journal, Pemex CEO Emilio Lozoya explained the move makes sense because, "the geology is similar and we can benefit from numerous areas of collaboration with international oil companies."

Lately, the executive has highlighted Mexico's failure to develop unconventional areas. In a speech July 30, Lozoya explained that Pemex had spud six deepwater and three shale wells in 2012 compared to 137 and 9,100 in the US in the same year, respectively.

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Lozoya estimates the US company will be created by year-end and said Pemex is, "already exploring numerous projects."

Although Pemex has various international subsidiaries that handle its trade of crude, refined goods and natural gas, its only venture outside Mexico is the Deer Park refinery in Texas, launched by a JV with Anglo-Dutch major Shell (NYSE: RDS) in 1993.

The announcement from the CEO comes just a week after President Enrique Peña Nieto presented his energy reform proposal that looks to break Pemex's oil monopoly in Mexico.

Pemex is not legally barred from international operations, but as Fluvio Ruiz, a professional consultant for the NOC, told BNamericas, "it is viewed badly politically because the question always ends up being ,'Why not just reinvest in Mexico?'"

Ruiz told BNamericas that federal treasury SHCP's intense oversight of Pemex's budget also makes international operations more difficult to justify.

"If we want a healthy, well-planned internationalization of Pemex, budget autonomy is necessary in energy reform," the consultant said in June.

Budget autonomy for Pemex is one of Peña Nieto's pillars for energy reform, as is a new tax structure for the NOC, which was laid out by treasury minister Luis Videgaray last week.