Can Pemex Handle New Oil Reserves in Mexico?

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Aug. 15 (Bloomberg) -- “Foreign Affairs” Editor Gideon Rose and Bloomberg’s Olivia Sterns examine Mexico opening up energy reserves to big oil companies. They speak with Tom Keene and Adam Johnson on "Bloomberg Surveillance.” (Source: Bloomberg)

A 38-year-old kid at a harvard business school as turning the mexican state on its head.

He is the new ceo of pemex.

Fascinating being a former oil trader myself.

I think this is a really cool story.

Here is a company that is nearly -- has had a nearly 80 year monopoly on mexican energy.

Schoolchildren celebrate the nationalization of the oil industry.

This is very emotional.

The only reason it has been happening is because the president provided the support for it to happen.

He has tapped this 38-year-old emilio lozoya, who is a very much member of the new guard, he is a young global leader from the world economic forum.

He has the task of transforming the state monopoly into a competitive entity.

What did he say?

How is he going to do it?

He is going to get money from foreign companies.

Most importantly, the changes in the laws allow us for the first time to partner with companies that will bring three elements to the table that will allow us to increase our production rate.

Number one is technology.

Number two is financial capital.

Number three is human capital.

They lack the funding, they lacked the expertise.

He is very confident that they can be competitive because the cost of production per barrel is $20. 20 books.

That is incredible.

-- 20 bucks.

That is incredible.

Who are they teaming up with?

How do they find them?

He was very coy about it.

He would not name names.

He would not publicly reveal it.

They are in talks with chevron.

They have had hundreds of approaches.

Nearly all of the oil majors.

When it comes to reform, they are doing everything right.

I hope the market ultimately rewards them and the benefit of that.

If you are an international technocrat and you want to get your country moving over the long-term, this is what you would do.

You would do what mexico is doing over the last couple of years.

It would be a great success story.

To get back to what i was saying about who he is going to partner with, chevron has been publicly disclosed.

We have mou's with all of the major international oil companies, not just chevron.

The majors are interested mostly to invest in the deep waters of the gulf of mexico.

Pemex has had a 53%-60 4% -- 64% exploratory success rate.

But we did not necessarily have the expertise to develop those projects and bring them into production.

They are probably most excited about digging offshore.

The american side of the gulf, mexico, everybody has been digging in and dropping holes.

On the mexican side, it has been completely unexplored.

They are also excited about the prospects of shale.

The trouble is that they do not have the same land rights as many countries outside the u.s. and you need a lot of water to develop the shale.

The fascinating subtext here -- everybody in the world wants that u.s. expertise, from the nigerians to the russians.

Is that the most effective lever ultimately and foreign policy?

Using big business?

It is and you can also deny it.

When you are seeing with ukraine and russia is that our response to a geopolitical strike is to remove our economic carrots and to deny them access and they'll reward for good behavior should be to have access to our technology, expertise, finance, and so forth.

He is a tough man to nail down.

He is a tough man to nail down.

It all started when we had these tragic headlines about the children at the border.

I was doing research into what the immigration flows are doing.

I saw that people are not really crossing the border to come into the south of the u.s. looking for work because the mexican economy is picking up and that is thanks to the reforms under

This text has been automatically generated. It may not be 100% accurate.

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