Government puts brakes on Pemex-Repsol deal

The Minister of Industry, José Manuel Soria, met last Friday with Pemex representative Emilio Lozoya and the Mexico's Secretary of Energy to clarify that any deal concerning Repsol should get approval from the Spanish government.

Fortunately, the Minister of Industry supported Repsol in a regulation law that defines a refinery as a strategic asset. And Repsol has important investments in this sector throughout Spain. Hopefully, what happened with Endesa can be avoided. Endesa was a Spanish power company that was bought by the Italian company Enel. If the deal isn't advantageous for Repsol, then a Pemex takeover could end poorly.

Mexico's state-run oil company, which owns 9.3% of Repsol, denied yesterday that it has plans to buy Repsol in order to solve its many problems. Telecom billionaire Carlos Slim also said that he was not working with Pemex on its strategy. Both Pemex and Sacyr stocks fell yesterday as investors caught wind of these rumors.

In short, Pemex was just testing the markets to see who would back a deal that cuts up Repsol and leave it with just its most productive components.

Leaders are trying to keep Spain's first multinational corporation from falling under the control of a state-run company like Pemex, which has to fix serious budget imbalances, eliminate corruption and try to privatize the company despite high internal resistance.