From the New York Times:
For seven decades, Pemex, Mexico’s state-owned oil monopoly and a mainstay of the government’s revenue, regulated itself — which is a polite way of saying it could do pretty much as it pleased.The Mexican government relies on Pemex oil revenue from wells like these in Veracruz for as much as 40 percent of its budget.
No authority challenged the wisdom of investments like the billions it has spent here in the Chicontepec oil field to extract just a trickle of petroleum even as private companies have pulled torrents from similar shale rock in Texas and North Dakota.
The company’s safety procedures went largely unscrutinized as it joined the oil majors drilling in deepwater areas of the Gulf of Mexico. And the company faced no serious consequences for not keeping its promises to raise output or operate more efficiently.
But in the last few years, that has begun to change. The tiny National Hydrocarbons Commission, created by the Mexican Congress in 2008 to increase regulatory oversight of the company, is proving to be a surprisingly sharp thorn in Pemex’s side.
The five-member panel of energy specialists, which has a staff of 61 and an annual budget of about $7 million, has begun to confront the company’s executives over where and how they drill for oil. With a raft of new regulations and its own blunt assessments of the practicality of Pemex’s projects, the commission is pushing the company to explain its plans.
Pemex does not have to follow the regulators’ recommendations, but the commission’s young president, Juan Carlos Zepeda, is speaking out when it does not.
“The strength of the commission is in public opinion,” said Mr. Zepeda, 42, an economist who contends that Pemex, officially Petróleos Mexicanos, should be more transparent as it spends $20 billion this year to find and pump oil. “The force of change will come from Congress, from opinion leaders, from national universities, from society.”... In the last few weeks, Pemex and the chief of its production and exploration subsidiary, Carlos Morales Gil, have begun responding to the pressure. The company officially reduced its estimate for probable reserves in Chicontepec by about 30 percent, to 6.49 billion barrels of oil equivalent, ending two years of wrangling with Mr. Zepeda’s team.
Then, at the end of March, Pemex announced that it had signed a contract with Wild Well Control, a Houston company that handles oil well disasters, including the 2010 BP spill, to provide deepwater containment systems, and it is in talks with a consortium of gulf oil companies to provide additional services. Pemex is also analyzing whether it should buy additional insurance for the deepwater wells, Mr. Morales said.