Mexico to Weigh Plan on Splitting Up Oil Monopoly : Energy: If the proposal to break up Pemex is approved, it could lead to the sale or privatization of parts of the firm, analysts say.

A plan to break up Mexico’s biggest corporation--the government-owned Petroleos Mexicanos (Pemex) oil monopoly--into four independent operating units and an affiliated trading company was scheduled to be presented to President Carlos Salinas de Gortari late Monday.

Oil production, refining, natural gas and petrochemicals will each become separate companies reporting to a common corporate headquarters under the plan, according to press reports.

Pemex’s foreign sales will continue to be the purview of an affiliate created three years ago, shortly after Salinas took office. The company, with $19.2 billion in 1991 revenue, is Mexico’s single largest exporter.

If the president agrees to the plan, approval by Congress, which is dominated by Salinas’ Institutional Revolutionary Party (PRI), is virtually assured.

Oil analysts in Mexico and the United States said the plan will be most effective as an intermediate step to ending total state ownership.

“It leads the way to sell or privatize parts of the company or to sell stock,” similar to the government’s sale of minority interests in the banks when they were government-owned, Mexico City economist Jonathan Heath said.

“There could be something up the sleeve of the Mexican government. Otherwise, I don’t see how that (reorganization plan) substantially deals with anything,” said George Baker, an American expert on the Mexican oil industry.

Government officials have repeatedly denied that the reorganization is a prelude to selling any part of the company.

Mexico has already begun contracting out some drilling and other oil services. In addition, later this month, the number of petrochemicals that can be refined exclusively by the government is expected to be cut from the current 19 to fewer than five.

The reorganization is expected to provoke massive layoffs in the oil industry, in addition to the more than 20,000 workers Pemex cut from its payroll last year alone.

Shortly before the plan was to be presented to Salinas, a demonstration of about 200 laid-off Pemex workers marched down the main boulevard here, Paseo de la Reforma, demanding their jobs back.

The most significant aspect of the plan is the decision to separate natural gas from petrochemicals, Baker said. It indicates that Pemex no longer thinks of natural gas solely as a raw material for chemicals, but realizes its usefulness as a cleaner-burning fuel for Mexico’s pollution-plagued industrial centers.

The plan was drawn up in response to a presidential order issued May 13, shortly after a leak in a Pemex gasoline line caused an explosion that killed more than 200 people in Guadalajara.

The tragedy created pressures to rethink the role of Mexico’s nationalized oil industry. Leading rightist intellectuals, notably Enrique Krause, even called on the government to add Pemex to the list of hundreds of companies privatized during the Salinas administration.

Despite the timing, no reports that have come out about the plan indicate that it deals with public safety issues. The government had previously commissioned reviews of Pemex facilities throughout the country.