December 9, 2013 / 2:41 PM / 6 years ago

Mexico Senate committees near vote on bold energy reform

MEXICO CITY, Dec 9 (Reuters) - Mexican Senate committees on
Monday resume debate of an energy bill that would open up the
world's No. 10 oil producer to private investment by allowing
lucrative contracts in the sector's most dramatic revamp in 75
years.
    The bill, announced by centrist ruling party and opposition
conservative lawmakers on Saturday, would let private firms
partner with ailing state oil firm Pemex via
profit-sharing, risk-sharing and service contracts as well as
licenses in a bid to stem an output slide. 
    Mexico's peso  rallied sharply on Monday
morning to a 7-week high on the back of the weekend presentation
of the revised version of the reform, which was bolder than
expected.
    Senate committee lawmakers debated the bill on Sunday, but
did not wrap up speeches in time for a vote. They are set to
resume their session on Monday, and are widely expected to sign
off on the bill. It then heads separately to the full Senate and
lower chamber for votes. 
    The reform, which would keep ownership of crude in state
hands, is a cornerstone of an economic reform drive that
President Enrique Pena Nieto hopes will boost long-lagging
growth in Latin America's No. 2 economy. 
    It would allow private investors to drill for the country's
crude but stops short of full-blown concessions that oil majors
had been hoping for. 
    Companies will not be allowed to book oil reserves on their
balance sheets, as many had hoped, though they will be able to
report projected revenue from agreed contracts for accounting
purposes.
 
    It marks is a big step from the service contracts now on
offer, under which companies are paid a fee and can recover
costs. It also goes well beyond the proposal made by Pena Nieto
in August, which was limited to profit-sharing contracts.
    Pena Nieto, who has also pushed through an overhaul of
Mexico's tax rules, telecoms sector, bank lending regulations
and education system, hopes to pass the energy reform before
Christmas but lacks a majority in Congress.
    He needs the support of conservatives to push the bill
through after the leftist Party of the Democratic Revolution
(PRD), which opposes opening the oil sector, pulled out of
talks. 
    PRD members on Sunday called the bill "national treason"
while centrist ruling Institutional Revolutionary Party (PRI)
lawmakers and conservative opposition figures sang its praises.
    The draft marks a major break with tradition in Mexico,
where assets of foreign oil companies were expropriated in 1938
to create Pemex, which is a symbol of national pride.
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