Monday, November 10, 2008

Juan Camilo Mouriño (RIP) and Energy Reform in Mexico

By George Baker

It is a shock for the Mexican political system – and for me personally – to face the death of the 37-year-old Interior Minister (and de facto vice president) of Mexico owing to a bizarre airplane crash – not in a remote site in the Sierra Tarahumara mountains of Chihuahua, but on a main boulevard in Mexico City and just a few miles from the national airport (and yet fewer miles to the Presidential Residence).

In Mexico, it is always important to try to distinguish between events and meta-events. The latter are message-events intended to convey a message to one or multiple public or private constituencies. Given the pattern of assassinations of top police officials in 2008, especially of those connected to President Felipe Calderon's anti-drug campaign, it was immediately imaginable that the airplane crash in which this official and others, plus pedestrians and motorists, died was an assassination (hence, meta-event), not a mere accident (event).

The Interior Ministry manages one of the four intelligence agencies of the government (CISEN), and the ministry was involved in the planning of the government's security and anti-drug efforts.  Assassinating the interior minister would be a message that no one in the government who opposed the narcos was safe.

There is much about Mr. Mouriño that is not in the public record:  What is known is that he was born in Madrid, the son of a Spanish father (and, he said, a Mexican mother). In Mexico, he was a child of privilege, owing to his family's lucrative contracts with Pemex in the State of Campeche.  He obtained a BA in economics from the University of Tampa, with subsequent graduate work in accounting at the University of Campeche.

In 2000, he was elected a federal congressman, and, without prior experience (except for that of his family's business) was named to head the Energy Commission of the Chamber of Deputies. 
It is not in the public record when he became part of the inner circle of Felipe Calderón, but, when Mr. Calderón was appointed Energy Minister in September 2003 (after the hapless Ernesto Martins), Mr. Mouriño followed him to the ministry as an advisor. In 2004, he was appointed Under Secretary for Electricity.

He left the Ministry four months after Mr. Calderón was dismissed in May of 2004 (technically, Mr. Calderón resigned on May 31). Briefly, he was Acting Secretary of Energy prior to the nomination of Fernando Elizondo.

Mr. Mouriño became the executive coordinator of the then-underdog campaign of Mr. Calderón to be the PAN presidential candidate, and later the coordinator of the PAN presidential campaign with Mr. Calderón as the candidate.

Mr. Mouriño was campaign coordinator in the spring of 2006 when I had lunch with him and Ernesto Cordero (who also had served in the Energy Ministry with Mr. Calderón, as Under Secretary for Planning, and who would later be appointed to a cabinet ministry in the government).  The lunch, at the Suntory Restaurant near the World Trade Center in Mexico City, was arranged by Ricardo Silva, a Pemex platform contractor from Jalisco.

The conversation, which was in Spanish, revolved around the issues that a Calderón administration should pay attention to in the energy sector. I recall few details beyond that of my emphasizing the importance of developing a strategy for deepwater and cross-border oilfields. He and Ernesto expressed interest in these topics, but they revealed little of what was on their minds in the way of policy.  As is usual from such encounters, there was little or no follow-up. I sent emails to him, but never received a reply.

After the election on July 2, Mr. Mouriño became the head of the Calderón Transition Team. The September 26, 2006 issue of Poder y Negocios featured the photograph of the strikingly handsome Mr. Mouriño on the cover, and he was described as the leader of Calderón's kinder (all young) of advisors and the person who would likely be the strong man in the next administration.

For the first two years of the Calderón administration, he was the chief of staff of the President, and then head of the Office of the President, substituting for Francisco Acuña, the former governor of Jalisco.  He served just ten months in this position.

As the Interior Ministry is the official body of the executive branch that communicates with the Congress, all policy initiatives passed across his desk. It was rumored that he was the intellectual author of the Calderón energy reforms.  Mr. Mouriño came under attack by Andrés Manuel López Obrador, who accused him of enriching his family business by arranging improper contracts with Pemex when he was a congressman and later when he was in the energy ministry (La Jornada, Feb. 28, 2008; NYT, March 15, 2008).

At the time of his death Mr. Mouriño was working to achieve a PAN majority in the Lower House of Congress from the elections scheduled for July 5, 2009. One line of speculation is that the reforms that were not passed in 2008 might be possible with a PAN-majority Lower House during the 2009-12 legislative period.

Mr. Mouriño's energy legacy is mixed: The energy reforms of 2008 are likely to benefit those service companies that, already, have lucrative contracts with Pemex. The reform of Article 33 of the Federal Administration Law provides that the Energy Ministry will submit to the Foreign Ministry (SRE) proposals for agreements and treaties for cross-border oilfields.

But neither Mr. Calderón nor Mr. Mouriño took up the heavy lifting of insisting – despite the populist rhetoric to the contrary – that the Mexican Constitution is neutral about the role of oil companies in Mexico. It is the Petroleum Law of 1958 that invents – without constitutional foundation – the notion that payment for the activities of exploration and production cannot be made as a percentage of production, a concept that was clearly stated in Articles 8 of the Petroleum Law of 1941.

Nor did either one, in the design of the Pemex Law of 2008, propose any measure that would fix the dysfunctional organization of the upstream subsidiary.  In practice, as the oil companies have learned, combining the function of exploration with that of production is a great mistake.  True, the Transitional Articles hint that there may be an important restructuring ahead in relation to the subsidiaries, but such a hint is no substitute for recognizing in the Senate Energy Forum that there are serious problems in Pemex Exploration & Production (PEP) – starting with the flawed logic of its very existence.

Finally, it was a big policy defeat for the Calderón administration not to prevail over the trucking lobby of Pemex jobbers (including the Mouriño family business Grupo Energético del Sureste).
Given the demonstrated skill with which Pemex, over the years, has kept the federal government in the dark about the degree to which Pemex is not in alignment with international practices, it is likely that Mr. Mouriño died unaware of the real reforms that are needed in Pemex and the energy sector.

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George Baker is the director of Energia.com, a publishing and consulting firm based in Houston.  He can be reached via e-mail at g.baker@energia.com.