Mexico refining talks break down in Senate

By Jason Lange

MEXICO CITY, Sept 30 (Reuters) - Talks have broken down between Mexico's ruling party and key centrist lawmakers over how to boost oil refining and cut costly fuel imports, senators said.

The opposition Institutional Revolutionary Party, or PRI, has rejected the government's plan to overhaul refining, Sen. Carlos Lozano, a PRI member of the senate energy committee, told Reuters on Tuesday,

"It is getting tossed out," he said.

President Felipe Calderon's refining proposal, which would include allowing private companies to own refineries, needs support of the PRI to be approved by Congress.

It is part of a larger energy reform proposal currently being discussed in the Senate and aimed at reversing a decline in oil output in Mexico, a top supplier of crude to the United States.

Lawmakers late on Monday gave up on finding a middle ground between Calderon's refining proposal and the PRI's own plan, which would keep the refining industry in state hands, PRI Sen. Francisco Labastida, president of the Senate energy committee, told reporters.

"We have agreed that we don't agree," he said.

Instead, senators will put both proposals up for a committee vote in the coming weeks, said Sen. Ruben Camarillo, from Calderon's National Action Party, or PAN.

Even if Calderon's plan were to make it through Senate committees, the PAN lacks a majority in Congress and needs the PRI's votes to approve his refining plan.

The PRI will try to win support from leftist parties for its own refining plan that would keep gasoline production exclusively in state hands, Labastida and Lozano said.

The government is expected to have more chance of reaching a deal with the opposition on the other main element of the reform. The PRI is more receptive to Calderon's idea to let state-run oil monopoly Pemex sign incentive-based contracts with private companies to find and produce oil. (Editing by Jim Marshall)