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Fire in the Gulf of Mexico Shows Inefficiency of State-Owned Companies

Incendio en el Golfo de México deja en evidencia la ineficiencia de las empresas estatales

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[Leer en español]

The gas leak from a marine pipeline that caused a huge fire in the middle of the Gulf of Mexico generated criticism of the management of the state-owned oil company Pemex and has highlighted the risks of the Mexican government’s energy policy.

Although the imposing images of an eye of fire in the middle of the sea have traveled the world, so far there is little information about what happened.

Apparently, a valve in a Petróleos Mexicanos (Pemex) underwater pipeline had failed, causing a gas leak that ignited and caused a huge fire in the open sea.

The state-owned oil company, which took several hours to report the matter, issued a brief statement, according to which the leak was detected at 5:15 a.m. on Friday in a gas pipeline near the KU-C platform, located in the Campeche Sound, which holds important crude oil deposits.

According to the company, “the incident was immediately attended” and three vessels were deployed to put out the fire and the pipeline valves were closed, in such a way that the leak was considered controlled at 10:45 a.m. (15:45 GMT), more than five hours after its detection.

During his tour of the northern state of Sonora, the Mexican President, Andrés Manuel López Obrador, was questioned by the press about what happened and limited himself to saying that “there is no loss of human lives” and that “the origin of the leak will be investigated.”

Pemex and the inefficiency of state-owned companies

The fire in Mexico’s coasts generated criticism against the energy policy of President López Obrador, who since taking office has bet on maintaining control of the oil industry despite the enormous debt and inefficiency of the state-owned company.

The president maintains a battle in the courts to defend his energy reform, which prioritizes state-owned companies, Pemex and the Federal Electricity Commission (CFE), over private investment in renewables.

The spotlight is on Pemex, which for years has been going through a production and debt crisis, amounting to 113.9 billion dollars.

“There is a problem of lack of resources in the company. Most of the resources have been channeled to operations and debt payment and maintenance has been left aside,” said energy consultant Paul Alejandro Sánchez.

Sánchez recalled that successive governments have used Pemex as a “money machine” that has been overtaxed to collect resources, but “the company has not been strengthened internally.”

The state-owned oil company is the crown jewel of López Obrador’s energy policy, a great admirer of former President Lázaro Cárdenas, who in 1938 expropriated oil so that it could be managed by the state.

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