On Dec. 5, Mexico’s Energy Ministry began auctioning off the crown jewels of its oil reserves, deepwater tracts that, along with those for fracking, are supposed to set off an oil-and-gas rush south of the border. The auctions are a result of a 2013 law that opened the country’s oil and gas industry to private companies, after 75 years of public ownership. What could go wrong?
Plenty, as recent experiences in the United States suggest.
Five years ago, Deepwater Horizon familiarized the world with the risks of deepwater drilling, and Americans are increasingly aware of the dangers of hydraulic fracking. In Mexico, the threats from both will be magnified: The state-owned oil company, Petroleros Mexicanos, or Pemex, has long operated with scant environmental oversight, a legacy that will most likely carry over as private-sector operations take over.
Mexican environmental and workplace safety laws have greatly improved over the last 30 years, but they have lacked teeth. Insufficient investment in monitoring and enforcement has curbed their sway, especially in places that need them the most, such as the Coatzacoalcos River in southern Veracruz, seat of a vast majority of Pemex’s petrochemical production.
Despite decades of enforcement efforts, conditions along the Coatzacoalcos had not improved appreciably by 2013, when I gathered local citizens, from fishermen to accountants, to talk about these issues. Testifying to the repeated explosions and spills, decimated fisheries and neighborhood eruptions of leukemia and other cancers, most agreed that Mexico’s environmental laws were simply not being enforced here.
Harsh as the burdens have been on this region’s residents, this blind eye to Pemex’s pollution has served a kind of public purpose. The disregard has protected a firm that was, after all, a branch of the government, furnishing 30 percent or more of Mexico’s federal budget. Ironically, back in the 1930s, environmental destruction wrought by oil multinationals had provided a powerful impetus for Mexico to nationalize them.
In response, a new agency has been created to handle the environmental and worker-safety impacts, the Security, Energy and the Environment Agency, known by its Spanish acronym ASEA. But, however well-intentioned its leaders are, they have been dealt a nearly impossible hand. While the United States’ Bureau of Safety and Environmental Enforcement concentrates almost entirely on deepwater wells, ASEA regulates much more: shallow-water and land wells (conventional as well as for fracking), land pipelines, refining and processing plants, gas distributors and all 12,000 of Mexico’s service stations. It must do so with a staff half the size of the B.S.E.E. — with around 90 inspectors.
ASEA staff members have diligently sought advice from the United States and others, and remain hopeful they can improve on Mexico’s pre-existing environmental regime. But with limited personnel, they have to rely largely on self-policing within firms; the agency’s inspectors leave Mexico City only to check high-risk operations. Otherwise, this new agency still relies on local offices of Mexico’s legacy environmental regulators, the Secretariat for the Environment and Natural Resources (knows as Semarnat) and the Federal Office for Environmental Protection (known as Profepa) to keep tabs on environmental conditions in the most vulnerable places, including the Coatzacoalcos River.
Yet in the wake of dipping oil prices, these older agencies have been cutting back their own oversight. Semarnat’s head in Coatzacoalcos now disavows responsibility for “industrial” impacts. Profepa’s local operation now only “administrates” directives issued out of Jalapa, Veracruz’s capital, some three hours to the north. Seen from this corner of the country, the arrival of ASEA has not so much strengthened as fragmented Mexico’s environmental state, breaking up what little local supervision there was.
This fragmentation, and the fact that ASEA lacks jurisdiction over marine pollution and petrochemical plants, sets the stage for disaster. We’ve already seen troubling signs of what may now be in store. An explosion this past April at the Pajaritos vinyl chloride plant on the Coatzacoalcos, lately sold to the private firm Mexichem, killed 32 workers and injured 136, and sent out an immense cloud of smoke and toxic vapor over surrounding towns. Half a year afterward, we await official report about what went wrong, as well as legal charges against those responsible.
Overshadowed by media coverage of drug violence and corruption, the weakness of Mexico’s environmental rule of law has quietly worsened. That’s especially troubling given that private enterprise now stands poised to gouge the nation’s ocean floors and subsoils in new and potentially dangerous ways.
Deepwater tracts auctioned off this month contain oil worth as much as $10 billion off the Mexican coastline. Among the winners in the bidding were a veritable who’s who of oil giants: Total, Chevron, and Exxon-Mobil, as well as the Chinese multinational Cnooc Limited and the Anglo-Australian BHP Billiton, just last year responsible for a massive and deadly spill of mining wastes in Brazil. Those newest to this kind of drilling, like Cnooc, will most likely be the first to slip up, though the Deepwater Horizon accident is a reminder that the experienced multinationals can cut corners, too.
What Mexico needs is strong guidance from the United States. Regulators in the two countries already have a good working relationship, though that could be in danger if Mexico bashing continues to boil in Washington and elsewhere. Best practices, training and resource sharing are critical steps needed to help the government regulators manage the looming challenge of a greatly expanded oil-and-gas sector. If they don’t, Mexico may soon find itself a poster child for the failed environmental state.
Christopher C. Sellers is a professor of history and the director of the Center for the Study of Inequality and Social Justice at Stony Brook University, and a fellow at the Woodrow Wilson Center. He is writing a book on the energy industries in Mexico and the United States.