UPDATE 5-Mexico lawmakers preparing to debate energy reform - top senator

Wed Dec 4, 2013 6:25pm EST

By Miguel Gutierrez and Adriana Barrera
    MEXICO CITY, Dec 4 (Reuters) - 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.  
    Lawmakers have been negotiating the fine print of the
reform, which will determine how far-reaching it will be.
    Supporters say it is needed to raise slowing growth in
Mexico, Latin America's second-largest economy. Opponents call
the reform a de facto privatization of national assets.
    David Penchyna, leader of the Senate's energy committee and
a member of Pena Nieto's Institutional Revolutionary Party
(PRI), said the bill would be submitted to Senate committees on
Thursday, but that the committees would not vote on it until
Friday at the earliest.
    Penchyna said the committees would on Thursday settle on a
plan for debating the bill. Once approved by the committees, the
bill must then be approved by both houses of Congress.
    "We are very close to finishing drawing up the bill to be
able to present it ... not just the changes that will be
proposed, but also a presentation of the reasons," Penchyna told
reporters.
    His comments come after Mexico's Senate passed an electoral
reform demanded by the opposition early on Wednesday, the last
major obstacle to pushing on with the energy bill. 
    The electoral bill, would allow lawmakers to serve
consecutive terms in office and curb the power of the
presidency, still must be voted on by the lower house.
 
    Police erected metal barriers around the Senate on Wednesday
as several hundred protesters, including children, demonstrated
peacefully against the energy reform.
 
    On Tuesday, prominent leftist Andres Manuel Lopez Obrador
was rushed to hospital for surgery after suffering a heart
attack, reducing the likelihood that he will be able to lead
street protests against the energy plans.
    However, his son called on supporters to push ahead with
plans to form a human circle around Congress.
    Lopez Obrador, a former mayor of Mexico City, was runner-up
to Pena Nieto in last year's presidential election and is
perceived as one of the biggest threats to energy reform.
    The leftist Party of the Democratic Revolution (PRD), which
opposes opening the oil sector to private investors, withdrew
from a cross-party pact last week, raising chances PRI lawmakers
and conservatives will pass a far-reaching energy reform.
    
    PAN PRESSURE
    The PAN has made its support for the energy overhaul
conditional on passage of the electoral reform.
    To reverse almost a decade of declining crude output, Pena
Nieto wants to open up the state-controlled oil sector to allow
private investors to team up with oil monopoly Pemex 
and share in profits from exploration and production. 
    The PAN, which is the PRI's natural ally on the energy
revamp, is pushing for more lucrative contracts to be offered,
such as concessions, and lawmakers say they are exploring
options for bigger changes.
    "I can tell you in that if the text does not include
instruments (beyond profit-sharing), the PAN will not vote for
it," PAN congressman Juan Bueno told Reuters. "Companies don't
like profit-sharing contracts and neither do we."
    "Nor will the PAN support it if there is no mechanism that
states that oil income is destined for a sovereign oil fund."   
   
    Long the dominant force in Mexican politics, the PRI lacks a
majority in Congress and needs PAN support to pass the energy
bill, which is expected to happen later this month.
    Senior officials in the PRI have signaled the party is
willing to consider a broader energy reform. 
    That could include production-sharing contracts that will
pose a bigger political challenge in the face of massive public
protests the left has pledged to stage against the reform.
    Mexico has the biggest proven oil reserves in Latin America
after Venezuela and Brazil, at nearly 14 billion barrels. It
also has shale-gas resources that might be as high as 460
trillion cubic feet, according to Pemex data.
    But Mexico's crude output has fallen by a quarter since
peaking at 3.4 million barrels per day in 2004.  
    The reform as originally proposed in August falls short of
rules in oil-producing peers such as Brazil, Colombia and Norway
that allow companies to keep a share of output.
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