28 March 2008

Oil boom delivers wealth, pressures to Campeche town

Oil worker

David Agren
The News

Ciudad del Carmen, Camp. – Rudecindo Cantarell was fishing in a rich shrimping zone known as Las Delicias in the early 1970s, when he noticed thick crude floating past his boat. He initially attributed the slicks to leaks spilling from ships passing through the area. But the oil continued reappearing.

The veteran fisherman eventually notified officials with Petróleos Mexicanos, or Pemex, in Coatzacoalcos, Veracruz of his discovery on two occasions, but the state-owned oil concern showed little interest. Cantarell would later go to the Pemex headquarters in Mexico City with news of oil bubbling up to the surface of the Campeche Sound.

Pemex eventually dispatched technicians to Las Delicias, and, within three years, the company constructed its first offshore platform in an area that would eventually produce more than 2 million barrels of crude on a daily basis.

Cantarell had discovered the world's second-largest oil field, which now bears his name, but because the Constitution grants the state ownership rights to all natural resources, he had no legal claim to it. He died penniless in 1998.

"If he had been an American, he would have been a millionaire," said Dr. Daniel Cantarell, a local historian in Ciudad del Carmen, Campeche, and a distant relative of the fisherman.

But Rudecindo Cantarell's inadvertent find unleashed an economic boom in Ciudad de Carmen, now a port city of 155,000 inhabitants on a slender island surrounded by mangroves just off the Campeche coastline.

The discovery of oil transformed the modestly prosperous fishing outpost into a boomtown. Warehouses and industrial facilities now occupy the main docks once used by some of the more than 4,000 fishing boats that previously hauled in jumbo shrimp – the region's principal product prior to the discovery of oil. Helicopters departing for the drilling platforms some 80 kilometers offshore are a common sight. Two modern bridges – which were built after a ferry accident – now link the island with the mainland.

Crude pumped from Cantarell has been a boon for the federal government, which today supports 40 percent of its annual budget with oil revenues. But it also has produced a windfall for local contractors, whose services range from supplying offshore oil rigs with everything from milk to tortillas to furnishing Pemex with sophisticated equipment for extracting oil from deep below the ocean floor.

Pemex employees and contract workers in Ciudad del Carmen – many of whom hail from other parts of Mexico – have cashed in with relatively generous benefits and salaries. The employees and contractors use their earnings to purchase homes in modern subdivisions and large pickups and sport utility vehicles, which they drive down newly paved streets. Municipal officials estimate the oil industry now accounts for 80 percent of the regional economy.

But many locals missed out on the newfound prosperity. They watched Pemex and an army of contractors displace the local fishing industry and then found themselves largely passed over for positions with the petroleum monopoly.

In addition, the influx of outsiders – comprised of wealthy oil workers and impoverished job-seekers arriving from other states – placed enormous strains on a municipality that previously lacked paved roads, adequate drainage and a secure source of drinking water. Meanwhile, those flush with cash began crowding locals out of the rental market and paying inflated prices for basics like food and transportation.

"If a rental property used to cost 800 pesos, after Pemex arrived, it cost 5,000 pesos," said Dr. Cantarell, who recalled oil workers pitching tents in the town square during the early days of the boom due to a lack of accommodations.

"Pemex never prepared the town to receive so many people."

Since its founding in 1716, when the Spanish finally evicted marauding pirates from the area, Ciudad del Carmen has lived through a series of serendipitous economic bonanzas. Past booms ranged from the harvesting of dyewood to exporting chewing gum to catching jumbo shrimp.

"They say that this place has been blessed, that the Virgin of Carmen looks out for us," said Dr. Cantarell, who has authored 19 books on Campeche history. "As one activity would disappear another would almost immediately take its place."

But oil was different from the other booms – and many of its riches have failed to trickle down to the native population.

"We're not rich, but we have a mentality of wealth here because nothing was ever lacking until Pemex arrived," said Marco Antonio Rodríguez, president of Marea Azul, a local environmental advocacy group.

Resentment toward Pemex and the oil industry still runs high in the area, according to some local observers.

"There are frictions here because so many people born in Ciudad del Carmen aren't hired by the industry," said Jorge Luis Sansores, communications director at the Universidad Autónoma del Carmen.

Those people include Bernardo Pantoja, a fisherman-turned taxi driver, who, along with his three brothers, abandoned shrimping in the early 1990s after Pemex forbade them access to the waters surrounding its oil platforms and their catches dried up.

"There used to be a lot of shrimp and it was really profitable," Pantoja said, holding his hands six inches apart to show the size of the jumbo shrimp he used pull from the areas now occupied by drilling platforms.

"But Pemex entered the area and screwed everything up," he said. "They installed the first wells and shut down everything."

Pemex prohibits fishing in a large area surrounding its drilling platforms – and navy patrols ward off potential interlopers. The company expanded its exclusion zone after the Sept. 11, 2001 terrorist attacks.

Its drilling activities and a spate of oil spills are blamed for wiping out the prime breeding grounds for jumbo shrimp, but Dr. Cantarell said poor management and over-exploitation by fishermen from outside of the region also played a role. The Agriculture Secretariat reported that the shrimp catch in the Campeche Sound declined from 2,938 tons in 2000 to just 843 tons in 2006. Catches in the 1970s averaged more than 20,000 tons. The Environmental Secretariat recently listed the beaches around Ciudad del Carmen as some of the most polluted in Mexico, although much of the contamination is from untreated sewage rather the oils spills, which are generally carried by currents toward Tabasco and Veracruz.

The federal government and Pemex established two trust funds as compensation for the displaced fishermen, who were expected to use the 15-million-peso annual payments to establish other economic activities. Some of the fishermen are now trying to establish fish farms, while a group of ribereños – fishermen that stick close to shore and mostly catch robalo, shrimp and oysters – established an ice house and a bottled water business.

Some ribereños still engage in fishing, but they say their catches are modest.

"There are some good days, but our haul often doesn't even cover the cost of buying fuel," said Jorge Alonso Jiménez, 30, as he clutched a tall can of beer after a morning of fishing for robalo.
Jiménez pointed to corruption and irregularities with the trust funds as a prime source of the problem.

"Pemex gives a lot of money so that you stay out of its exclusion zone," he commented, adding that much of the money appears unaccounted for and that many non-fishermen are listed on the padron, or beneficiaries' list.

Jiménez said he receives only about 1,000 pesos per year from one of the funds.

"If Pemex sends 10 pesos, we might get one peso," he explained, adding: "I'd rather be an oil worker."

No one from either of the trust funds was available for comment.

There are two principal labor organizations in Ciudad del Carmen's oil industry. Section 42 of the national oil worker's union represents those Pemex employees manning the company's offshore drilling platforms, while Section 47 is responsible for administrative and support workers.

Lázaro Gómez, a Ciudad del Carmen native, works 12-hour shifts on a drilling platform for two weeks at a time. He landed his job through a connection: his sister was a nurse in a hospital for Pemex employees, where, he said, "Pretty much everyone is working with a family member."

His job includes generous health and retirement benefits and a Christmas bonus worth 57 days' pay. According to Pemex salary figures dated Aug. 1, 2006, entry-level support employees working in marine maintenance earn 8,042 pesos per month while an engineer's assistant makes 14,389 pesos. All employees receive monthly allowances for food, housing and fuel totaling another 8,354 pesos along with 35 days' paid vacation, attendance and performance bonuses and scholarships for their children.

Gómez did not disclose his salary, but several contractors said that Pemex employees generally work fewer hours and receive a better overall compensation package that those in the private sector.

According to Gómez, most Pemex workers in Ciudad del Carmen had previous connections with one of the union bosses, who often dictate hiring, influence working conditions and sell positions.

He estimated that 75 percent of his coworkers come from outside the local area.

A Pemex spokesman, who was unauthorized to speak on the record, attributed the hiring of outsiders to a lack of qualified local candidates, but added that the situation was gradually changing. Officials from Section 42 declined comment for this story.

José Francisco Chi Dominguez, a spokesman for the municipal government, said Pemex hires a few locals for unskilled positions and that some of the multinational contractors hire graduates from the local university.

But he cited "union influence" for the presence of so many out-of-state workers.

"The union has more deeper roots in states like Tamaulipas and Veracruz so they bring in people from those places," he said.

Chi Dominguez acknowledged the lingering dissatisfaction over Pemex's hiring practices and impact on the fishery, but he said the oil giant plows money back into the municipality through several programs meant for improving the local waterworks, paving roads and funding public works projects like police precincts and health clinics.

Ciudad del Carmen's petroleum boom could ironically end before the local population starts occupying key positions in the industry. Production in the Cantarell oil field has already started declining, prompting concern for many in the local government.

"As [the oil field] gradually declines, the city could go back to what it was in the early 70s," Chi Dominguez said.

Dr. Cantarell, the historian, spoke of past precedents for what was happening in Ciudad de Carmen.

"The oil here is going to run out. That's obvious," he said.

"And people are once again standing around asking, 'What comes next?'"

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