Sweeping Mexico energy reform may stumble in Congress

Thu Nov 8, 2012 6:00pm EST
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By David Alire Garcia and Adriana Barrera

MEXICO CITY (Reuters) - Mexico's incoming government will send a wide-reaching energy reform bill to Congress in the first half of 2013, but it is braced for the prospect of accepting a watered-down version that would likely deter investment by oil majors.

President-elect Enrique Pena Nieto wants to shake up the sector by opening up state oil monopoly Pemex to more private investment, hoping it will help boost production.

But as a feisty debate in Congress over a labor reform bill has shown, Pena Nieto may struggle in a divided Congress to secure a constitutional reform needed to forge ahead with the deep changes he wants to make.

Changing the constitution, which is necessary to allow foreign companies to take a stake in the country's ample hydrocarbon reserves and for Pemex to enter into joint ventures, requires a two-thirds majority vote in Congress.

Sen. David Penchyna, leader of the energy committee in the Mexican Senate and a member of Pena Nieto's Institutional Revolutionary Party, or PRI, has hedged his bets.

"Right now, over there in that drawer I can take out, without exaggerating, six different proposed models, some with constitutional reforms, some without," Penchyna, a senator from Mexico's eastern Hidalgo state and former national PRI spokesman, said in an interview this week.

"Does a constitutional framework give greater certainty? Yes," he added. "But ... the sector is so attractive and profitable even without constitutional changes."

Mexico, the world's No. 7 oil producer, nationalized its energy industry in 1938 and it remains a powerful symbol of national self-sufficiency.   Continued...

Mexico's President Felipe Calderon (2nd R) and Mexico's Interior Minister Alejandro Poire (R) sit together with Mexico's President-elect Enrique Pena Nieto (L) during a private meeting at Los Pinos Presidential Palace in Mexico City October 23, 2012. REUTERS/Fernando Marroqui/Mexico Presidency/Handout