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Oil Report

UPDATE 2-Mexico ruling party sees oil reform delayed

(Adds details, comments in paragraphs 8, 12, 13 )

MEXICO CITY, April 14 (Reuters) - Protests in Mexico’s Congress will likely delay approval of a government energy reform plan to boost private investment in the struggling oil industry, a senior ruling party lawmaker said on Monday.

President Felipe Calderon’s conservative party is seen able to win the 50 percent majority it needs to pass an oil bill after leaders of a centrist opposition party said last week they liked the general look of the proposal.

But left-wing protests against the plan have paralyzed Congress and the centrist Institutional Revolutionary Party, or PRI, has said it is not in a hurry to approve the bill before the spring session of Congress wraps up on April 30.

“It’s clear we can’t do it during this period of sessions,” National Action Party Sen. Santiago Creel, who leads the governing PAN in the upper house, told Mexican radio.

Mexico is the world’s No. 5 producer of crude and a top U.S. supplier but state-run oil company Pemex is not finding new reserves fast enough to stave off a decline in output.

The left-wing Party of the Democratic Revolution, or PRD, says planned changes to allow state oil monopoly Pemex to offer performance-based incentive fees in service contracts would amount to a creeping privatization.

The party’s militant former presidential candidate, Andres Manuel Lopez Obrador, is leading rallies against Calderon’s proposal.

Protesting PRD lawmakers and members from two other smaller left-wing groups -- the Labor and Convergencia parties -- have camped out on the floors of both houses of Congress since last Thursday.

“If we agree with the other parliamentary group on a wide, open debate ... we are prepared to suspend our actions in both chambers,” said the PRD’s Senate coordinator Carlos Navarrete.

Calderon could pass the law without PRD votes, but the party is vowing to block congressional sessions indefinitely unless other parties agree to open a broad discussion that would bring in outside experts and run until August.

Sen. Manlio Fabio Beltrones, the PRI’s leader in the Senate, proposed a 50-day uninterrupted debate followed by a vote in an extraordinary session. His party’s backing will be key for Calderon’s bill.

The PAN is seen supporting that suggestion. “We are fully open to it being discussed over various weeks,” Creel said. But Mexico’s left flatly rejected Beltrones’ proposal, local media reported.

“We will continue to insist in the need of a wide open national debate ... we ask that the Congress’ recess is used for this debate,” senator Dante Delgado with the Convergencia party was quoted as saying by Reforma newspaper.

Congress is due to close from the end of April until its regular autumn session opens on Sept. 1.

Lopez Obrador, who irked Calderon’s government for months after his July 2006 election defeat with street protests over what he said was a rigged result, drew tens of thousands of people to a rally on Sunday against the energy proposal.

The proposed bill would give Pemex more operational and budgetary autonomy and bring in bonus fees for hired companies that could boost exploration and production projects. (Reporting by Jason Lange and Miguel Angel Gutierrez; Editing by Michael Urquhart)

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