Mexico opposition party seeks more petchems

21 February 2008 22:57  [Source: ICIS news]

MEXICO CITY (ICIS news)--A leading figure in Mexico’s largest opposition party on Thursday backed greater petrochemical production and opposed opening refining to private capital.

“We need to reduce crude exports and do more within the country to add value: producing petrol and chemicals,” said Cuauhtemoc Cardenas Solorzano, a leading figure in Mexico’s leading opposition, the Revolutionary Democratic Party (PRD), in Spanish. He spoke at Mexico’s lower legislative house, the Chamber of Deputies.

Mexico’s legislature could vote on energy reform within a few weeks.

Cardenas spoke just a week after the nation’s energy minister, Georgina Kessel of the ruling National Action Party (PAN), said Mexico’s Congress could take up a government-backed energy reform plan by late March.

“It is said that it would be a good idea to open up refining to the private sector,” Cardenas said. “I believe it would be a serious mistake.”

He argued that private refiners would take the best crude oil, leaving the state industry with the dregs; and that private companies would prove unreliable during national emergencies.

Refining by-products, which are also used by the petrochemical industry, are in short supply in Mexico, and the nation also imports 40% of the petrol sold domestically as well as substantial amounts of diesel.

The pro-business PAN has argued that the best way to increase supplies of petrol and diesel would be to allow private companies to build refineries.

Cardenas, who does not have a seat in Congress, argued instead for state investment in new refineries.

Mexico President Felipe Calderon said on Tuesday he aims to attract $1bn (€680m) of private investments in an 1m tonne/year ethylene plant by allowing Pemex to sign long-term contracts on natural gas feedstocks.

Such contracts are currently controlled by a Finance-Ministry-led committee, which always demands the highest legally permitted price for Pemex products.

Because the PAN only controls about a third of Congress seats, the ruling party cannot pass legislature on its own.

Cardenas said that all the nation’s parties agree that Pemex must be allowed more freedom in planning and price setting.

This year has seen fractious debate over energy reform, a break with smoother legislative activity in 2007, when the Institutional Revolution Party (PRI), which is the nation’s third party in terms of legislative seats, brokered deals between the other two parties.

In 2008, leading PRD figures squashed negotiating moves and divisions opened up within the PRI. As a result, the energy reform has been repeatedly pushed later in the legislature’s schedule.

($1 = €0.68)

By: Alex Manda
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