Page 39 - Bloomberg Businessweek - November 19, 2018

Bloomberg Businessweek The Year Ahead 2019 Energy

seeing record gas imports from Russia.” The
decline of Groningen, the giant Dutch gas field, Pemex
has also increased Europe’s import demand.
President Donald Trump, keen to sell natu-
ral gas to Europe and capitalize on the U.S. shale
boom, has described Germany as “captive” to
Moscow. Last year he signed legislation giving ▷ The old guard at Mexico’s oil giant isn’t quite
him the right to sanction companies involved with AMLO’s program
in Nord Stream 2, including five European part-
ners that are helping fund it. Russian President
Vladimir Putin said on Oct. 3 that the pipeline, On the day after Andrés Manuel López Obrador—
whose older sibling runs roughly along the same nicknamed “AMLO”—was elected Mexico’s pres-
route and began delivering fuel in 2011, would be ident, the streets outside the headquarters of
built even if the other companies pulled out. Petróleos Mexicanos, the state-owned oil giant,
Nord Stream 2 also has detractors closer to were loud and rowdy in support. Inside the offices
home. Poland, which has a fractured relationship there was a morguelike quiet. Instead of shouting,
with its former Soviet ally, nixed the formation there were whispers: “What are you going to do?
of a joint venture of European energy companies Where are you going?”
that would work with Gazprom on the pipeline. Since 2015 a major restructuring of the com-
The country still buys Russian gas but plans to pany has trimmed Pemex’s workforce by about
replace it with fuel from Norway and other coun- 16 percent, pushing many managers into retire-
tries when its contract expires by the end of 2022. ment. It may now be facing a further brain drain
The German government and its biggest util- even as the new president promises to boost oil
ities point to a commercial relationship with production, say people familiar with the situa-
Russia that’s survived the Cold War as well as tion. Some managers and senior staff members
increasing tensions over Ukraine. “They’ve been have already left, the people say, and others are
50
a reliable supplier for the last 50 to 60 years,” says expected to follow.
Thomas Bareiss, Germany’s state secretary at the Their fear is that they’ll be paid less to do more
Federal Ministry for Economic Affairs and Energy. and that promotions will be stymied by outsid-
“And Russia needs to talk to the European Union. ers selected to lead the company, the people
It keeps us talking.” say. López Obrador has already named Octavio
Russian natural gas exports to Europe are Romero Oropeza, a political ally with no oil back-
having another banner year, after the country ground, to lead Pemex and will help select a new
shipped a record 6.8 trillion cubic feet in 2017. board half-composed of government officials.
But Andree Stracke, chief commercial officer at While Pemex has more than 129,000 employ-
the trading unit of German utility RWE AG, isn’t ees, the loss of talented senior staff and man-
worried by Gazprom’s increasing hold on the mar- agers “could cause a lot of disruption and time “This will come at a huge cost for
ket. “At some point, politicians need to say if they wasted in learning and inefficiency, the No. 1 prob- Pemex, both directly and indirectly”
are concerned, but for us it is business,” he says. lem of the company today,” says Nymia Almeida,
“It is a free accessible market. Whoever wants to senior vice president and lead Pemex analyst for
sell is welcome to sell their volumes.” Moody’s Investors Service. When asked about the
Gazprom has also had to adjust to how the number of senior staff who’ve left since the elec-
European market has evolved. Since gas is now tion, Pemex said in a statement the information
its own traded commodity, its price is less closely wasn’t available. A spokesman for López Obrador
linked to the cost of crude oil and more informed declined to comment.
by local natural gas prices. The fear of a drop in pay centers on a law that
Demand for gas could soar after Germany comes into effect in January that prohibits public-
shuts down its last nuclear reactor by 2022 and sector officials from earning more than the pres-
retires more coal plants, according to Ralf Bickel, ident’s salary of 108,000 pesos ($5,356) a month.
a senior energy adviser at Nord Stream 2. “Having It’s unclear if the law will include Pemex, but the
additional supply from Russia puts Europe in a company’s board of directors could approve a
much more comfortable situation,” he says. <BW> similar change. “It’s probable Pemex will reduce
�Lars Paulsson and William Wilkes, with Anna salaries because they are going to do whatever the
Shiryaevskaya, Reed Landberg, Kelly Gilblom, and government wants,” says Almeida.
Dina Khrennikova Bitterness has been brewing among the