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Insight

Ciudad del Carmen: Capital of the Offshore Industry

Wed, 01/25/2012 - 13:29

In the early 1970s, Pemex carried out its first exploration activities in the Campeche Basin, which subsequently led to the discovery of the Cantarell field about 70km from Ciudad del Carmen. Before that time, the coastal city was more known for its fishing activities, but within a decade gained a reputation for great opportunities related to oil production. Cantarell produced about 38% of Mexico’s crude in the 1980s, and 63.2% of production when it peaked in 2004. Since then, its production has declined considerably. Pemex discovered another field, named Ku, that led to the development of the Ku-Maloob-Zaap area located 107km northeast of Ciudad del Carmen; today it is Mexico’s largest oil producer.

After Pemex started production activities in the region, Ciudad del Carmen’s population grew considerably. Between 1970 and 1980, the municipality’s population doubled to 144,684, and continued growing to 221,094 in 2010, according to INEGI statistics. This is the result of specialized oil industry staff immigration, which also lead to thousands of secondary jobs created by industry activity. The number of inhabited housing facilities increased to nearly 60,000 in 2010 from nearly 40,000 in 1995 and the city grew by about 64 hectares annually between 1993 and 2009. Ciudad del Carmen had been known for its shrimping industry, which started in the 1940s and had dominated the city’s working life for some decades, but with the rise of the oil era came the decline of shrimping.

Pemex invested US$30.43 million in Campeche from 1995 to 2006 in projects of mutual benefit, meant to help both Pemex’s economic growth in the Carmen municipality and the population’s standard of living. In 2007, the NOC signed an agreement with Campeche State’s government to “strengthen and consolidate a new and constructive relationship of collaboration.” The company also makes donations to Campeche; for example, the NOC donated US$17.4 million in 2007 with the goal of improving roads, basic education, and fishermen’s quality of life.

With the decline of Cantarell and the peak of Ku-Maloob- Zaap, the question of what will happen to the city’s economic activity looms ahead; it now relies on the oil industry.

Development: Too much, too fast?

One cannot say the oil industry has contributed much to the city’s progress, according to Aracely Escalante, President of the Ciudad del Carmen municipality. Although Ciudad del Carmen’s inhabitants are proud of the name it has made for itself on regional, national and international levels, Municipal President Aracely Escalante says the oil industry has not contributed much to the city’s progress. “It’s important to point out that improved quality of life is relative; although part of the population did benefit, we are not certain that the bulk of the inhabitants have experienced favourable changes,” the municipality’s President says. She adds that living standards are linked to the quality of public services: the needs for these services have grown in Ciudad del Carmen, but the city’s income is not growing at the same rhythm. “We weren’t prepared to meet the increase of public services needed. This has caused and is continuing to cause problems, as our resources are insufficient to meet the growing needs of the population.” According to Escalante, what Pemex contributes through taxes doesn’t reflect what the city has to distribute to provide public services.

The importance of Pemex’s donations in the context of the company’s community support policies should not be denied, but Escalante says Pemex could do more to encourage local participation, such as awarding contracts, being more open to temporary collaboration works, and hiring local labour.

As to the effects of the region’s waning oil reserves, Escalante says one can suppose that, as Ciudad del Carmen’s economy changed with the oil boom, there might be another change with the decline of Pemex’s activities. “It is possible that a part of the population emigrates and that economic activity might contract. We think this will happen, but we don’t know over what period of time,” Escalante says. “Fortunately, we have other natural, renewable resources and tourism attractions. We have lived through an experience that taught us lessons: among others, that we shouldn’t depend on a single alternative. It’s time to diversify.”