Political strife pushes back approval for Mexican energy laws

MEXICO CITY, June 19 Thu Jun 19, 2014 4:37pm EDT

MEXICO CITY, June 19 (Reuters) - Political wrangling in Mexico means Congress is unlikely to approve before July legislation to complete an energy overhaul at the center of President Enrique Pena Nieto's economic agenda, lawmakers said on Thursday.

The ruling Institutional Revolutionary Party, or PRI, had hoped to pass in June the so-called secondary laws for a reform that will offer oil production and exploration rights to private companies, ending a state monopoly that dates back to 1938.

Pena Nieto hopes the reform will revive Latin America's no. 2 economy, which has underperformed regional peers for years.

The PRI lacks a majority in Congress and has relied chiefly on support from the center-right opposition National Action Party (PAN) to muster votes for its energy reform.

Wary of public opposition to the reform, however, Pena Nieto has also tried to keep the main center-left opposition Party of the Democratic Revolution (PRD) at the negotiating table, which has become an awkward balancing act for the government.

The energy laws have been a bargaining chip for the opposition, and both PRD and PAN lawmakers have staged walkouts from talks over the reform in the last few days to apply pressure on other ongoing political discussions in Congress.

As a result, both PRI and PAN lawmakers say approving the secondary laws, which set out details of how the new energy regime will work, no longer looks feasible in June.

"With the legislative set-up as it stands, we hope the energy reform will be finalized in the first few days of July. That's the impression we all have," said Ernesto Gandara, a PRI senator on the energy committee in the upper house of Congress.

The secondary laws to oversee the industry in the world's 10th biggest producer of crude are being closely watched by oil majors such as BP Plc and Exxon Mobil.

Jorge Lavalle, a PAN member of the Senate energy committee, blamed the hold-up on delaying tactics by the PRD, which plans to hold a national referendum in 2015 to overturn the reform.

"If all goes well, we could be in a position to be approving the reform in the first ten days of July," Lavalle said. However, if disputes continue, it could take longer, he added.

As Congress debates, the government faces a mid-September deadline to determine which oil fields remain with state-run company Pemex, and which will be up for grabs by private firms.

Lawmakers are also seeking agreement on the secondary laws for Pena Nieto's 2013 reform of the telecommunications and television markets, which aims to curb the power of tycoon Carlos Slim and dominant broadcaster Televisa.

Those laws have also been held up, but senior legislators are hopeful that they can be put to a vote this month. (Reporting by Dave Graham; editing by Gunna Dickson)

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