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Fox says Mexico’s oil company must become efficient, less dependent

MEXICO CITY – Mexico’s state-run oil company must become more efficient and less dependent on others for refined energy products, President Vicente Fox said Sunday in a speech commemorating the 63rd anniversary of the company’s nationalization.

Fox said again that he would not privatize Petroleos Mexicanos, also known as Pemex – long a sacred symbol of Mexico’s sovereignty.

On March 18, 1938, Mexicans across the country donated jewelry and their savings to help former President Lazaro Cardenas nationalize the country’s oil companies after their foreign owners refused to raise wages.



Yet today, as the world’s fifth-largest crude oil producer, Pemex is largely seen by industry officials as a bloated bureaucracy, unable to respond to market demands.

Speaking in the oil town of Ciudad del Carmen on the Gulf Coast, Fox said Pemex must become more efficient and competitive, while also eliminating years of corruption.



His speech came a day after the federal attorney general’s office announced the arrest of a Pemex accountant accused of stealing 12 million pesos (dlrs 1.25 million) and putting the money in his wife’s bank account.

Officials at the meeting in Mexico didn’t mention the Organization of Petroleum Exporting Countries’ decision Saturday to curtail its official output by 4 percent, or 1 million barrels of oil a day.

The decision was made in an effort to avoid supplying markets with too much crude at a time of economic turmoil and weak seasonal demand.

Mexico is not a member of OPEC, but has worked with the oil cartel in the past.

Still, since taking office Dec. 1, Fox has strengthened ties with the United States, which described OPEC’s decision Saturday as disappointing. Fox has pledged to work with President Bush to create a regional energy program that would stretch from Panama to Canada, and has said that he wants a market price for oil that is both fair to producing – and consuming – countries.

On Sunday, Pemex’s director, Raul Munoz, pledged to step up exploration efforts and increase reserves, while Fox called for a loosening of regulations that he claimed ”contribute to financing difficulties and corruption.”

He also said Pemex needs to develop its production and refining capabilities, with the help of private investment ”allowed within the law.”

”We can’t continue to live with the contradiction of exporting huge amounts of cheap crude and importing growing volumes of expensive, refined products,” he said.

In February, Fox named four of the country’s top businessmen to Pemex’s board, including telecommunications magnate Carlos Slim and the chairman of the world’s third-largest cement company, Lorenzo Zambrano.

The move prompted opposition legislators to accuse the president of preparing to privatize Pemex.

But Fox has said he believes the state-run oil company should be managed like a private company – while remaining under the government.

”The central plan is that Pemex function now like any other business,” he said.

Mexico has 32.6 billion barrels in proven oil reserves, the second-largest in the Western Hemisphere after Venezuela, and oil accounts for a third of the government’s revenues. More than half the country’s net oil exports go to the United States.

Fox promised that increased revenues from a leaner, meaner Pemex would help fund social programs and expand services like electricity to all Mexicans

”A renovated, successful, competitive, honest and transparent Pemex should give us a better country, one that we have dreamed about for our children,” he said.

AP-WS-03-18-01 1700EST


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