Associated Press
March 18, 2001

Fox: Mexican Oil Company Must Mature


              MEXICO CITY (AP) -- 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

              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 Gulf Coast port of Ciudad del Carmen, 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 $1.25 million (12 million pesos)
              and putting the money in his wife's bank account.

              Officials at the meeting in Mexico didn't mention OPEC's 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 Saturday, 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.''

              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

              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.