U.S.-Mexico Energy

The U.S. Reaction to Recent Reforms in Mexico's Petrochemical Industry Gao ID: NSIAD-91-212 May 3, 1991

Pursuant to a congressional request, GAO examined recent reforms in Mexico's petrochemical industry.

GAO found that: (1) Mexico's petrochemical industry faced shortages in supplies of basic petrochemicals and investment funds; (2) Mexico lacked financial resources for natural gas, the primary raw material for the petrochemical industry, exploration, and development; (3) the Mexican government had the exclusive right to produce and distribute all basic petrochemicals, but foreign investors may now acquire 100-percent ownership of a secondary petrochemical plant if they establish a special trust with a Mexican credit institution; (4) the Mexican-government-owned oil company, Petroleos Mexicanos (PEMEX), created a program to obtain private or foreign investment in its basic petrochemical plants, but PEMEX would remain the operator; (5) Mexican petrochemical investment reforms are subject to a risk of reversal, because they were created by administrative decree, not by law; (6) Mexico's accessibility to raw materials makes it the most economical place for U.S. producers of secondary petrochemicals to locate; and (7) the U.S. and Mexican petrochemical industries are complimentary.



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