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 The bill, announced by centrist ruling party and opposition
conservative lawmakers on Saturday, would let private firms partner
with ailing state oil firm Pemex <PEMX.UL> via profit-sharing,
risk-sharing and service contracts as well as licenses in a bid to
boost sagging production.
The reform, which would keep ownership of crude in state hands, is
at the center of an economic reform drive that President Enrique
Pena Nieto hopes will boost lagging growth in Latin America's No. 2
economy.
It is much bolder than a draft proposed by Pena Nieto's
Institutional Revolutionary Party (PRI) in August, which would have
offered profit-sharing contracts and was considered too tame for
attracting private firms.
Senate committee lawmakers debated the bill on Sunday, but did not
wrap up speeches in time for a vote. They will resume their session
on Monday. Once they sign off on the bill, it heads separately to
the full Senate and lower chamber for votes.
Pena Nieto hopes to pass the reform before Christmas but lacks a
majority in Congress. He needs the support of conservatives to push
the bill through after the leftist Party of the Democratic
Revolution (PRD), which opposes opening the oil sector, pulled out
of talks.
PRD members on Sunday called the bill "national treason" while
centrist ruling Institutional Revolutionary Party (PRI) lawmakers
and conservative opposition figures sang its praises.
"Today we have bet that we can imagine a Pemex that can go out and
compete in the world," said PRI Senator David Penchyna, who heads
the energy committee.
Saturday's proposal would allow private investors to drill for and
market the country's oil.
"I feel very optimistic about this," said Luis Miguel Labardini, a
partner at Mexico City-based energy consultancy Marcos y Asociados,
who said that the production-sharing contracts are "very important"
for Mexico's vast deepwater oil reserves.
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"It seems that the original PRI initiative from Pena Nieto wasn't
written in stone, and that Pena Nieto was able to take into
consideration the reaction of the industry."
The reform, however, stops short of full-blown concessions that oil
majors had been hoping for and does not allow companies to book
reserves. It does let them report projected income from agreed
contracts for accounting purposes.
"Bottom line is that if implemented this should boost (foreign
direct investment) and oil output over the (medium term)," David
Rees, an economist with Capital Economics, said in an email.
The draft marks a major break with tradition in Mexico, where assets
of foreign oil companies were expropriated in 1938 to create Pemex,
which is a symbol of national pride.
Outside the Senate, hundreds of protesters beat rocks and spoons
against barricades covered with graffiti assailing the energy
reform, as riot police looked on.
"What are all the police doing?" asks a small child in one street
art drawing. "Protecting thieves," a mother figure replies.
(Additional reporting by Veronica Gomez,
Miguel Gutierrez and Tomas Bravo; editing by Simon Gardner, Eric
Beech and Jackie Frank)
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