Mexico's opposition conservatives prepare energy reform bill

MEXICO CITY Tue Jul 16, 2013 9:24pm EDT

MEXICO CITY (Reuters) - Mexico's opposition conservative party will present its own bill to open up the state-run oil sector to private investment, a top lawmaker said Tuesday, putting pressure on the government to follow suit.

President Enrique Pena Nieto has pledged to allow more private capital in the state-run oil business to revive flagging oil output, but he has yet to present the details of his own legislation and it is unclear how far his bill will go.

Ruben Camarillo, from the conservative National Action Party (PAN), said Mexico needed to open up exploration, production and refining to private companies. The PAN has spent years pushing for a shake-up of state oil firm Pemex.

"Cosmetic reforms won't go anywhere. We are going to present a very audacious reform," Camarillo told Reuters in an interview. "Private-sector participation in all oil processes should not be prohibited as it is now."

Camarillo said the PAN bill will likely be presented in August and that it will propose changes to the hotly debated section of article 27 in the constitution seen as a legal obstacle to granting third parties contracts or concessions to participate directly in the oil sector.

Mexico already allows private companies to partner with Pemex on a wide range of service contracts, but explicitly prohibits profit-sharing and production-sharing agreements. Camarillo declined to clarify what type of contracts the PAN would back.

No party holds a majority in Congress, and the Party of the Democratic Revolution (PRD), Mexico's main leftist party, has said it will not back constitutional reform that would cede control of oil resources to foreigners.

Camarillo said a cross-party political pact that Pena Nieto has used to hammer out consensus between his own party and the opposition may not work for the more controversial issue of energy reform.

The so-called "Pact for Mexico" helped Pena Nieto win support from the PAN and the PRD for sweeping education and telecommunications legislation since he took office in December.

A PAN energy bill could force Pena Nieto to join forces with conservatives to pass more far-reaching reform. If Pena Nieto goes for a more moderate bill that would win support from the left, he could risk losing conservatives' backing.

The pact is facing other pressures as well. On Sunday, PAN and PRD leaders demanded Pena Nieto's government investigate allegations that his Institutional Revolutionary Party (PRI) illegally used public funds to finance campaigns for local elections in early July.

The opposition leaders also said the PRI would need to support a pending political and electoral reform aimed at combating bad practices before the opposition would pick up energy legislation.

(Writing by Michael O'Boyle; Editing by Mohammad Zargham)

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