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Oil and geopolitics - Feb 27

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Mexico's oil output falls, Pemex needs cash infusion

Sara Miller Llana, Christian Science Monitor
Should the national oil company allowing private investments? Critics worry about foreign control.
Oil output in Mexico, the third-biggest supplier to the US, is declining, and the state company Petroleos Mexicanos (Pemex) lacks the technology to explore for new reserves. For many the answer seems simple: more capital.

But now that senators have begun debating ways to attain that capital - a top priority of President Felipe Calderón - resistance has mounted, particularly to the idea to allowing in private enterprise.

In no place is there more opposition than along the industrial corridor in this resource-rich, steamy stretch of Veracruz State. "This oil is from here, and it belongs to us," says Francisco Lopez Martinez, who inspected oil barges at Pemex for 36 years before retiring this year.

The attitudes of residents in the neighborhood Oct. 24 in Coatzacoalcos, where lines of homes are almost entirely occupied by the engineers, mechanics, and computer repair personnel employed by Pemex's plentiful plants here, underscore President Calderón's biggest conundrum: Pemex is flagging, but the country is unlikely to do anything significant about it.

It matters to the US because Mexico is a top supplier at a time when global demand is high. It matters to Mexico because Pemex funds 40 percent of the country's national budget. But as the 70th anniversary of nationalization of the industry nears (March 18), political infighting could lead to an impasse.
(26 February 2008)

PEMEX in Death Throes Amid Political Squabbling

Diego Cevallos, IPS
Mexico’s state oil company, PEMEX, is broke, and the country’s crude oil reserves will run out in less than 10 years. But although local politicians agree on the diagnosis, few are proposing solutions, while recriminations, by contrast, are flying thick and fast.

The administration of President Felipe Calderón and the country’s main parties have promised to begin in March to design and discuss plans to get the oil industry back on its feet.

It is a touchy issue. To the left, it is tantamount to heresy to suggest that PEMEX should be partially privatised, or even given the freedom to pursue partnerships with the private sector.

The company covered about 42 percent of the Mexican state’s total budget in 2006 and 2007, with the result that it now has no capital to spend on innovation and development.

PEMEX was nationalised on Mar. 18, 1938 when the government expelled British and U.S. oil companies.

Andrés Manuel López Obrador, former presidential candidate for the leftwing Party of the Democratic Revolution (PRD), has repeatedly said in recent weeks that "the right" wants to privatise PEMEX, and warned that if that should happen, there will be outbreaks of violence.
(26 February 2008)

The Oil Factor In Kosovo Independence

Abdus Sattar Ghazali,
On February 17, Kosovo broke away from Serbia and declared its independence. Not surprisingly it was instantly recognized as a state by the U.S., Germany, Britain and France. With 4203 square miles area, Kosovo may be a tiny territory but in the great game of oil politics it holds great importance which is in inverse proportion to its size.

Kosovo does not have oil but its location is strategic as the trans-Balkan pipeline - known as AMBO pipeline after its builder and operator the US-registered Albanian Macedonian Bulgarian Oil Corporation - will pass through it.

The pipeline will pump Caspian oil from the Bulgarian port of Burgas via Macedonia to the Albanian port of Vlora, for transport to European countries and the United States. Specifically, the 1.1 billion dollar AMBO pipeline will permit oil companies operating in the Caspian Sea to ship their oil to Rotterdam and the East Coast of the USA at substantially less cost than they are experiencing today.
(26 February 2008)
Scratch an international political crisis, and one always seems to find oil or a pipeline beneath it. Still, it's hard to tell how much of a factor oil is. -BA

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