Mexican Senate committees on Monday resume debate of an energy bill that would open up the world’s No. 10 oil producer to private investment by allowing lucrative contracts in the sector’s most dramatic revamp in 75 years.
Mexican Senate committees on Sunday debated an energy bill that would open up the world’s 10th-biggest oil producer to private investment by allowing new types of contracts, marking the industry’s most dramatic overhaul in 75 years.
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.
Senators from Mexico’s two biggest political parties proposed a bill to break the nation’s 75-year oil monopoly by amending the constitution to allow production sharing contracts and licenses for outside producers.
The joint legislation would allow private companies such as Exxon Mobil Corp. (XOM) to develop fields in the largest unexplored crude area after the Arctic Circle as state-owned Petroleos Mexicanos seeks to reverse eight years of falling output. The bill would allow companies to log crude reserves for accounting purposes, which may make it easier to secure project financing.
Mexican lawmakers unveiled a draft energy bill on Saturday that includes contracts ranging from profit-sharing and risk-sharing to licenses to lure private investment, in what would be the biggest opening in the world’s No. 10 producer in decades.
Approval of the bill would mark the end of the decades-long oil and gas monopoly held by state-run Pemex, which is struggling to reverse a sharp slide in oil output due to years of chronic under-investment.
Protesters formed a human chain around Mexico’s Senate as lawmakers began debate Sunday on a bill to end state oil company Petróleos Mexicanos’ decadeslong energy monopoly.
The ruling party and the conservative opposition party agreed to a proposal on Saturday that goes beyond President Enrique Peña Nieto’s initial plan to let private companies share in oil and gas profits, allowing them to also share the risks and benefits of exploration and production with Mexico’s government.
Senate Passes Political Reform – Energy Reform Next, Stolen Radioactive Material, and Mexico´s Competitiveness vis-à-vis China – Weekly News Summary: December 6December 6, 2013
The Mexico Institute’s “Weekly News Summary,” released every Friday afternoon summarizes the week’s most prominent Mexico headlines published in the English-language press, as well as the most engaging opinion pieces by Mexican columnists.
What the English language press had to say…
This week the Washington Post noted that Mexico’s Senate passed the most dramatic political reform attempt in decades which would allow re-election of federal legislators, create new election oversight and make the Attorney General’s office independent from the executive. It also highlighted that the Senate is moving on to energy reform, which is considered the most critical part of the reform package that President Enrique Peña Nieto is pushing to have passed before the end of this year. The Economist noted that it will be difficult for Mexico´s left to stop the Energy Reform after Andrés Manuel Lopez Obrador suffered a heart attack on December 3rd. His absence weakened a blockade of the Senate that he had promised. Meanwhile, the Financial Post was not enthusiastic over the Energy Reform. In an article published this week, it argued that that even if the proposed reform is passed within a year, it could take up to 10 years for production to begin in the deep-sea reserves. Additionally, the profit-sharing contracts may not be as profitable as anticipated, as the terms under the proposal stipulate that foreign companies would receive a share of the revenues from the fields, rather than the oil and gas to sell themselves.
In another note, the BBC reported on Wednesday that a truck carrying medical radioactive material had been stolen near Mexico City. Mexico’s Nuclear Security Commission said that at the time of the theft, the cobalt-60 teletherapy source was “properly shielded”. Nonetheless, the Washington Post noted on Thursday, that the theft of the material sparked international concern over the possibility that the cobalt-60 could be used in a “dirty bomb.” By Wednesday afternoon, the same news outlet reported that authorities had found the stolen the radioactive material. The National Journal claimed that after the theft, a group of critics questioned if the International Atomic Energy Agency’s radiological security rules were enough for securing radioactive materials.
Mexican lawmakers will send a landmark energy bill to Senate committees on Thursday to pave the way for debate on a cornerstone of President Enrique Pena Nieto’s economic reform drive, a top ruling party lawmaker said on Wednesday.
The bill, which would open Mexico’s state-dominated energy sector to private investment in a bid to raise flagging oil output, will need approval of the Senate and lower house of Congress.
Shielded by three-metre-high security barricades, Mexico’s Senate is expected to sign off on energy reform plans this week, paving the way for a profound shake-up of the sector to be passed into law before December 15, a senior legislator said.
The legislation is the climax of an ambitious roster of reforms championed by Enrique Peña Nieto, Mexico’s president, designed to attract billions of investment dollars and fuel economic growth, and requires the rewriting of parts of the constitution to open up a sector that has been shackled to the state for 75 years.
Mexican Senate committees on Tuesday passed an electoral reform demanded by the opposition, taking Congress a step closer to a bill to open up the oil and gas industry at the center of President Enrique Pena Nieto’s economic agenda.
The Senate committees worked through reservations to the electoral bill on Monday night and gave it full approval early on Tuesday, passing it to the floor of the upper chamber.
The electoral reform, which opposition conservatives had made a condition of their backing for the energy bill, would allow lawmakers to serve consecutive terms in office.