UPDATE 2-Mexico leftists camp in Congress to stop oil plan

(Adds senator's quote, deputy finance minister's comments)

By Jason Lange

MEXICO CITY, April 11 (Reuters) - Leftist lawmakers blocked both houses of Mexico's Congress on Friday after an all-night sleepover protest against an oil reform plan that could open the state-run sector to more foreign investment.

Senators and deputies from the Party of the Democratic Revolution, or PRD, rolled out their sleeping bags on the floors of the upper and lower chambers on Thursday night after storming podiums to halt a debate on the government plan.

They vow to block congressional sessions indefinitely unless the ruling conservatives and centrists, who broadly back the plan, pledge in writing to open a broad discussion that would bring in outside experts and run until August.

"We're staying here and it's worth it because our personal discomforts are nothing compared to what they want to do (to the oil industry)," said Sen. Ricardo Monreal of the PRD.

Some leftist protesters slept overnight in tents outside the Senate and the chamber of deputies.

Inside the lower house, lawmakers snoozed on benches wearing oil worker hard hats, and on Friday morning they sang songs, waved Mexican flags, played chess and read newspapers.

President Felipe Calderon handed in a proposal on Tuesday to give state-run oil monopoly Pemex more autonomy and let it work with private companies under service contracts with bonus fees based on performance.

The PRD says Calderon is trying to privatize the cherished oil monopoly on the sly, but is split over whether to fight the plan in the debating chamber or with street protests.

On Friday, Deputy Finance Minister Alejandro Werner told reporters the government would present a bill "in the next couple of weeks" to cut taxes at oil fields with high production costs as part of the wider energy plan.

PEMEX BONDS WITHIN 18 MONTHS

Mexico, which nationalized its oil industry in 1938, is the world's No. 5 crude producer and a top U.S. supplier. Yet Pemex says it cannot shore up declining output and reserves without foreign partners.

Calderon's National Action Party, or PAN, lacks a majority in Congress but could get an oil bill passed with backing from the centrist Institutional Revolutionary Party, or PRI, which has said it likes the general look of the proposal.

The plan would allow incentive contracts across the oil sector from drilling and refining to pipelines and storage.

Werner said the government had broadly surveyed oil sector companies, who he said had expressed interest in the proposed class of contracts. Foreign oil majors contacted by Reuters have so far declined to comment on the proposal.

Calderon said on Thursday the reform could draw an extra $15 billion of investment annually from 2011 or 2012, which would create thousands of jobs and help fight poverty.

But firebrand leftist Andres Manuel Lopez Obrador, who paralyzed the capital in 2006 after blaming his presidential election defeat on fraud, has threatened road and airport blockades to stop the measure.

Werner said the tax bill would apply to fields where oil is hard to obtain, such as Gulf of Mexico sites where the sea is a kilometer or more deep or the Chicontepec onshore field which is a sprawl of small oil pockets in dense rock.

The bill must be submitted to the chamber of deputies and voted on separately as it affects Mexico's public finances.

Calderon's wider proposal also plans for Pemex to issue debt that local pension funds and ordinary Mexicans could invest in.

Werner said 3 billion to 10 billion pesos ($280 million to $950 million) in Pemex bonds could be issued within six to 18 months of Congress approving the broader oil bill. ($1=10.535 pesos) (Additional reporting by Miguel Angel Gutierrez and Luis Rojas Mena; editing by Jim Marshall)