Mexicans, Divided Over Pemex, Celebrate Foreign Oil Firms’ Ouster : Petroleum: At ceremony marking 1938 action, government confronts opposition to its plans to raise money by selling off petrochemical refineries.

Mexicans on Saturday celebrated the 57 years since they kicked out international oil companies, but they did so deeply divided over the future of state oil monopoly Petroleos Mexicanos, an important symbol of Mexican nationalism.

Already under fire for using oil export revenues to guarantee repayment of a $20-billion U.S. bailout package, the government now confronts opposition from oil workers to its plans to raise money by selling off petrochemical refineries.

“It is not selling the sector that will make it better, but rather modernizing it with our own resources,” union Secretary General Carlos Romero Deschamps told cheering oil workers and scowling officials, including President Ernesto Zedillo, at a ceremony marking the government’s expropriation of the oil industry in 1938 following a labor dispute.

The government decision then to stand up for oil workers forged a bond between sovereignty and labor rights that made Pemex, the state oil monopoly formed from the expropriated resources, the embodiment of Mexican nationalism.

A survey of 400 Mexico City residents published Saturday in the newspaper Reforma found that 78% considered Pemex--the largest corporation in the country and the most important source of federal revenue--”very important” as a strategic corporation in preserving national sovereignty.

Now, in economic crisis, the government is trying to redefine the relationships among nationalism, labor rights and oil. But oil’s historic and economic importance--its $32.4 billion in 1994 revenues represented 6% of the economy--makes that redefinition a subject of national debate.

And the strongest objections to the current strategy are coming from the powerful oil workers union, which traditionally has been a fundamental base of support for the Institutional Revolutionary Party, or PRI, that has ruled Mexico for 66 years.

The union has been uncharacteristically docile since Zedillo’s predecessor jailed its former leader on arms charges six years ago. But remarks at Saturday’s ceremony indicated that the workers may become more combative.

Normally a love fest between the government officials who administer Pemex and the oil workers--the aristocracy of Mexican labor--the ceremony became a forum for advocating two competing views of the Mexican oil industry’s future.

“The modernization of Pemex and government reform have made it necessary to narrow the mission of the company from multiple objectives that sometimes conflicted to a central objective of maximizing economic value,” said Adrian Lajous, the company’s general manager.

“This is a fundamental change,” he added. “Without ignoring its obligations to society, the government, its workers, clients and suppliers, it is necessary to distinguish between those obligations and the objectives of the company.”

The two were once indistinguishable, Lajous acknowledged. Pemex has paved roads and built movie theaters in the towns where its well-paid workers live. Families have looked upon oil industry jobs as birthrights to be passed from parent to child. And with oil exports providing one-third of the company’s revenues, Pemex subsidized gasoline and petrochemical prices for the entire nation.

“As a government monopoly, Petroleos Mexicanos took on functions and obligations that were the responsibility of government, not of a productive company oriented toward generating profits,” Lajous said.

Pemex also earned an ugly reputation among the citizenry: 71% of those questioned by Reforma said there is a lot of corruption in Pemex, 21% said there is a little and only 1% believed there is none.

Because of the economic crisis, Lajous said, Pemex must now contribute more to government coffers. At the same time, the company must invest to bolster its lagging reserves--which have fallen nearly 10% since 1987 to 63 billion barrels.

That requires selling subsidiaries that Pemex cannot afford to upgrade and running those that remain as efficiently as possible, he said.

“Our generation is obliged to give a contemporary meaning to our oil nationalism,” he said.

But labor leader Deschamps argued that the decisions being made by the government will be harmful.

“Not the oil workers, nor the country, nor its government, of course, can permit that the crisis before us deteriorates Pemex’s solid place as a fundamental pillar in Mexico’s development,” he said.

“We want to find together new roads that are mutually advantageous. Give us tools, training and resources; invest in renovation, and then we can produce more and better. The figures are there to prove that we can do more with less.”

Hiring outside contractors has simply put oil workers out of jobs without reducing costs, he argued. “Do not underestimate the workers’ wisdom or merit,” he pleaded.

Deschamps was particularly adamant in opposing plans to sell off 61 petrochemical refineries in the next year. “Our experience as oil workers indicates that it is precisely the petrochemical sector that has products with the most value,” he said to a standing ovation.

One of those who cheered the loudest was Jorge Wade, a worker at the Minatitlan refinery in the Gulf state of Veracruz. “As workers, we know we can administer this industry well,” he said later. “Selling refineries is not the best way to raise money for exploration and production.”

Even though oil workers resist Pemex’s privatization, radical-right economists such as Luis Pazos insist that Zedillo has not gone far enough.

“While in Mexico we are still encased in a Byzantine discussion over whether private and foreign investment in Pemex should be permitted, the majority of the countries with oil companies are modernizing and capitalizing through the sale of stock, privatization and associations with international capital,” he wrote in the business newspaper El Financiero.

“However, it seems that Zedillo still does not feel secure enough to take the bull by the horns and end the myth of a bureaucratized Pemex that has impeded the oil industry from becoming a true and better benefit for the Mexican people,” he wrote.

The Reforma poll, however, found that most Mexicans do not agree with such an extreme solution. The overwhelming majority of those questioned--69%--were opposed to privatization of Pemex, and 70% said they did not even want to allow foreign gasoline stations into Mexico.