Bloomberg News

Pemex Blast Death Toll Rises to 36 as Investigation Continues

February 04, 2013

The death count rose to 36 yesterday as a self-imposed deadline to provide an update on what caused a blast at state-owned oil company Petroleos Mexicanos’s headquarters came and went.

The latest victims’ bodies were pulled from the rubble of a Pemex building damaged in the Jan. 31 explosion in Mexico City. The company’s chief executive officer, Emilio Lozoya Austin, met yesterday with Energy Minister Pedro Joaquin Coldwell and Attorney General Jesus Murillo Karam. They did not provide additional details on the explosion.

The nation’s deadliest explosion since a mine accident in 2006 came as President Enrique Pena Nieto, who took office Dec. 1, planned to submit a bill to increase private investment in the energy industry and lower taxes on Pemex, the nation’s largest company by revenue and the world’s fourth-biggest crude producer. The initiative would be the biggest energy-industry overhaul since the nation seized oil fields from British and U.S. companies 75 years ago.

Murillo said Feb. 1 that authorities would provide an update on the cause of the blast in “a day or two, but no later.” U.S. Secretary of State John Kerry discussed the blast with his Mexican counterpart by telephone this weekend, the State Department said yesterday.

“I reckon they’ll have to say something today or tomorrow,” David Shields, an independent energy analyst in Mexico City, said in a telephone interview. “People are worried and uneasy about the fact that nothing is coming out.”

Storage Area

The basement of the building where the explosion occurred held storage for documents, polishing machines and a water treatment plant, a Pemex official, who declined to be identified, citing corporate policy, said Feb. 2 in an interview. The union office was on the first floor, along with management offices for human resources and administration, which also occupied space on the second floor.

The explosion won’t have any financial or economic impact on Pemex, Lozoya, who took the helm of the oil producer two months ago, told reporters Feb. 1. Production is about 2.57 million barrels of oil and the headquarters will reopen Feb. 5 after a three-day federal holiday weekend commemorating Constitution Day.

The blast also injured 121 at the complex, where about 10,000 work or visit daily, Lozoya said. Thirty-five remain hospitalized, Pemex said yesterday on its Twitter account.

Murillo said Feb. 1 the government is “determined to find the truth of this incident whatever it may be, whether it involves an accident, whether it involves negligence, whether it involves an attack,” he said.

Pemex has stepped up security at oil production facilities during the investigation, the company said.

Shattered Windows

Footage on Milenio TV showed shattered windows and gaping holes in walls on several floors after the blast rocked the B2 building adjacent to the company’s main office, the second- tallest tower in the country, between 3:40 p.m. and 3:45 p.m. local time on Jan. 31. Security personnel surrounded the complex and roped off the area outside, where dozens of ambulances were parked and a bust of the late President Lazaro Cardenas, who nationalized Mexico’s oil industry in 1938, stood intact.

Pena Nieto on Jan. 30 spoke at a conference for his Institutional Revolutionary Party, promoting his proposed energy-industry overhaul in a bid to stem production declines at Pemex. While he’s promised not to privatize Pemex, he’s also pledged to forge ahead on a modernization that would allow more non-government investment and boost competitiveness.

The president drew criticism on Feb. 2 after local media reported he had left Mexico City for a vacation over the nation’s three-day weekend. He returned to the Mexican capital and toured the Pemex headquarters late the same day.

Pemex Overhaul

The government undertook some overhaul efforts with Pemex under the previous administration. In 2008, then-president Felipe Calderon pushed through a bill that allowed outsourcing production projects through performance-based contracts.

“At this point, I don’t think it will have any impact” on the broader discussion of an energy sector overhaul, Alejandra Leon, a Mexico City-based analyst at IHS CERA, said in an interview. “Especially if this is just an accident, which is the most likely cause.”

At least three other incidents have caused significant casualties at Pemex in recent years. A fire at a gas distribution hub near the U.S. border left at least 30 dead last year, and 21 workers were killed in 2007 when an oil rig hit a drilling platform in the Gulf of Mexico.

In addition, an explosion prompted by a criminal gang attempting to steal oil from a pipeline in the state of Puebla killed 28 in 2010.

To contact the reporters on this story: Brendan Case in Mexico City at bcase4@bloomberg.net; Carlos Manuel Rodriguez in Mexico City at carlosmr@bloomberg.net

To contact the editor responsible for this story: Sylvia Wier at swier@bloomberg.net


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