Plan to Break Up Mexico’s Oil Giant Wins Final OK : Energy: The nation’s president approves dividing the state-owned petroleum monopoly into four companies.

President Carlos Salinas de Gortari late Monday approved a plan to break up Mexico’s biggest corporation--the government-owned Petroleos Mexicanos oil monopoly, with $19.2 billion in 1991 revenue--into four subsidiaries.

Oil exploration and production, refining, natural gas and basic petrochemicals, and secondary petrochemicals will become separate companies reporting to a common corporate headquarters under the plan.

Each company will have its own board of directors chaired by the general director of Pemex, as the corporation is known.

The foreign trade activities of Mexico’s single largest exporter will continue to be the purview of an affiliate created three years ago, shortly after Salinas took office.

Oil analysts in Mexico and the United States said the plan will be most effective if it turns out to be an intermediate step.

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

Mexico City economist Jonathan Heath predicted that “it leads the way to sell or privatize parts of the company or to sell stock,” such as the minority interest the government sold in banks when they were state-owned.

The most logical candidate for divestiture is the secondary petrochemicals subsidiary, which will oversee production of chemicals made from refined products rather than directly from oil or natural gas. Private investment is permitted in those products.

However, in a press release announcing the plan, Los Pinos-- Mexico’s White House--repeated denials that the reorganization is a prelude to selling any part of the company.

“The purpose of the proposed restructuring is for Pemex to better comply with the functions that the government and society have assigned it, without modifying the current constitutional framework,” the release stated.

The subsidiary in charge of secondary petrochemicals will compete directly with private companies, according to the release.

Later this month, the number of petrochemicals considered secondary is expected to rise as the definition of basic petrochemicals--products made directly from oil or natural gas and which can be refined exclusively by the government--is decreased to fewer than five from the current 19.

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

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

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.

The plan now goes to Congress, which is dominated by Salinas’ Institutional Revolutionary Party, where passage is virtually assured.