(Adds lawmaker comment and background)
MEXICO CITY Aug 6 Mexican lawmakers on
Wednesday gave final approval to an overhaul of the state-run
energy sector aimed at luring billions of dollars in new
investments by foreign and private oil companies.
The senate approved a series of laws this week aimed at
attracting companies such as Royal Dutch Shell Plc and
Exxon Mobil Corp, and help stem declining crude
production in Latin America's No. 2 economy.
President Enrique Pena Nieto said on Wednesday he would sign
the set of bills into law next week, paving the way for private
companies to announce their plans to tap resources in the
world's 10th biggest oil producer.
The legislation fleshes out a constitutional overhaul
approved last year that ended the 75-year monopoly of
state-owned oil company Pemex and opens up oil, gas
and electricity markets to private companies.
Pena Nieto broke through gridlock in a divided Congress to
pass energy, telecommunications and banking legislation that
aims to lift Mexico out of decades of sluggish growth in the
country's most significant reform push since the NAFTA trade
deal with the United States and Canada in the 1990s.
Senators approved on Wednesday a final bill that amends
public finance laws. The government finances around one-third of
its budget with oil revenues.
"Today concludes a period of valuable, profound and
transformative structural reforms that consolidate and
strengthen Mexico's foundations," said Senator Manuel Cavazos
from Pena Nieto's Institutional Revolutionary Party (PRI).
The center-right National Action Party helped pass the
legislation that was opposed by leftist lawmakers who claimed
foreign companies would siphon off Mexico's oil wealth for
themselves. President Lazaro Cardenas nationalized the oil
industry in 1938, making Pemex a source of national pride.
Officials expect the reforms will eventually spur enough
economic growth to help curb the government's dependence on
taxing Pemex, which has seen output fall by more than a quarter
from a peak in 2004 as heavy taxes cut into its ability to
The legislation gives the government flexibility on setting
the commercial terms for exploration and drilling contacts and
private firms will be able to count reserves as their own, a key
provision sought by publicly-traded companies.
Analysts project the reforms could spur tens of billions of
dollars per year in investments and companies could soon begin
to announce plans to build pipelines and electricity plants, but
establishing oil and gas drilling projects may take years.
Mexican entrepreneurs could also rush in. Petrochemicals
maker Alfa and billionaire Carlos Slim's conglomerate
Grupo Carso could expand oil-related units.
Pemex asked to keep over 80 percent of its proven and
probable oil reserves and the Energy Ministry has until
mid-September to determine which fields the company will keep.
Once the ministry has made is decision, Pemex could move
quickly to announce joint ventures with global oil majors but it
is expected to take into the second half of next year before the
government auctions its first exploration and production
contracts to private companies.
(Reporting by Michael O'Boyle, David Alire Garcia and Noe
Torres; Editing by Muralikumar Anantharaman)