Pemex, the state-owned oil company, plans to award a 10-year contract to a private company to maintain a section of pipeline in southern Mexico in an effort to cut costs and reduce accidents.
The company can save as much as $200 million over 10 years by contracting the maintenance of one section of pipeline that had required 55 separate contracts in the last two years, according to a presentation Carlos Morales, director of exploration and production, made to a Senate committee this week.
Pemex's contract plan is part of an effort to include private companies in Mexico's oil industry, which has been restricted to the government.
The state-owned monopoly announced earlier this year that it awarded its first contract to help drill for oil in older fields where depletion has caused production costs to rise. Contracts in mature fields will be a test for determining if Pemex will extend them to production in Chicontepec and other onshore fields, Morales said in July.
Pemex plans to award a contract in October to manage one of four sections in which it divided its pipelines that serve the offshore and southern regions. Thirteen companies, including 11 from Mexico such as Diavaz and Gutsa, are participating in the bidding process, Morales said. Japan's Itochu Corp. is among the two foreign companies that are bidding.
The bid calls for maintaining a stretch of pipeline that connects Pemex's Dos Bocas oil terminal with a refinery at Minatitlan and petrochemical plants in Coatzacoalcos.
Pemex came under fire for the lack of spending on pipeline maintenance after a series of explosions and spills beginning in 2005 caught the eye of Mexico's Congress. Pemex officials said spending on maintenance has been minimal in the past 15 years because government taxes leave the company with little cash, resulting in a deterioration of pipelines, some more than three decades old.
Some congressmen, such as Jose Murat of the Institutional Revolutionary Party, labeled the pipeline contract illegal and said it represents a strategy to privatize Pemex. Mexican law bars private companies from producing, warehousing and transporting oil and gas.
In June 2005, Pemex stopped awarding integrated contracts to private companies to drill for natural gas in northern Mexico after a group of senators filed a lawsuit with the Supreme Court seeking to have them declared illegal. Pemex resumed offering the contracts this year after the court ruled in the company's favor.
Morales defended the legality of the pipeline maintenance contract in his presentation, pointing out that Pemex plans to control all aspects of hydrocarbon transportation and warehousing.
The contract company will only execute a rehabilitation and maintenance plan that is set and evaluated by Pemex. Union workers assigned to pipelines will keep their jobs, he said.
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