Mexico energy reform to target deep water: lawmaker

Fri Aug 9, 2013 3:34am EDT
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By Alexandra Alper and David Alire Garcia

MEXICO CITY (Reuters) - Mexico will propose energy reform that includes controversial changes to the constitution aimed at drawing private know-how to tap the country's massive deep water oil and shale gas reserves, a senior ruling party lawmaker said late Thursday.

The bill, expected to be presented by President Enrique Pena Nieto next week, will open the way for private sector investment to boost output at ailing state oil and gas monopoly Pemex PEMX.UL, which has seen production slump for nearly a decade.

Marco Antonio Bernal, who heads the energy commission in the lower chamber of Congress and belongs to Pena Nieto's ruling Institutional Revolutionary Party, said the proposal will include changes to two articles of the country's constitution.

He said so-called secondary laws to be considered after the constitutional reform's passage will flesh out a more generous contracting scheme that favors deep water and shale developments, where Pemex has very little experience.

"We don't need private participation, nor participation of other companies on land and in shallow waters. Pemex has the technology, the capacity to do it alone," said Bernal.

"Where we don't have the capacity is in deep water and shale gas exploitation."

Pemex believes there are up to 29 billion barrels of crude oil equivalent in its territorial waters in the Gulf of Mexico, more than half the country's potential oil resources.

But the company lacks technology, experience and results tapping deep water wells, even as on the U.S. side of the Gulf production has been growing for decades.   Continued...

A demonstrator holds a Mexican national flag in front of riot policemen during a protest against the privatization of the state oil monopoly Pemex at the Angel of Independence in Mexico City July 1, 2013. REUTERS/Tomas Bravo