(Bloomberg) — Mexico President Claudia Sheinbaum is testing a bold new strategy to lure the private sector to the country’s oilfields by sharing joint-venture profits, a sharp pivot after years of shutting foreign investors out of energy projects.
Most Read from Bloomberg
Under plans unveiled Wednesday, Petroleos Mexicanos will split profits with private-sector partners in ventures that may account for as much as 10% of the state oil company’s output. The approach signals a clear shift away from her predecessor and mentor, former President Andres Manuel Lopez Obrador, who aggressively sought to minimize the involvement of overseas companies in crucial sectors such as oil and electricity.
Sheinbaum, who was sworn in in October, inherited a state-controlled oil behemoth with falling output and a staggering debt burden of roughly $100 billion. Attracting foreign capital and expertise is seen as key to turning around Pemex’s production woes and shoring up its balance sheet.
Sheinbaum risks sending mixed signals to potential investors, however, if they perceive the new profit-sharing model to contradict recent changes in Mexican law that require Pemex to prioritize government policy goals over profitability.
The new model will divide proceeds from oil developments that are left over after the recovery of initial investments and the government’s 30% crude levy, the president said.
“That way, we guarantee that the private sector will recover its investment and collects its share of the profit, while Pemex collects its share,” Sheinbaum said in announcing the new strategy. “If Pemex decides it needs help from the private sector, there’s a scheme established by law that guarantees profits for Mexicans, and that Pemex also profits.”
Although Pemex and the energy ministry are in the process of evaluating which projects could require private-sector participation, Sheinbaum said that such deals may involve as much as 10% of the driller’s production.
Last month, Sheinbaum’s administration presented the bill, which aims to streamline permitting and establish mechanisms for private sector participation in the energy sector. The legislation also would guarantee state-controlled energy companies Pemex and Comision Federal de Electricidad will retain their dominance in the domestic sector.
