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Latino Daily News

Thursday December 19, 2013

Energy Overhaul One Step Closer to Becoming Law in Mexico

Energy Overhaul One Step Closer to Becoming Law in Mexico

Photo: Oil news

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Mexico’s sweeping energy-overhaul bill is nearly ready to become law after being declared constitutionally valid by Congress’ Permanent Commission.

“Articles 25, 27 and 28 of the constitution ... in the energy area are declared reformed ... (the bill) now goes to the executive branch for constitutional effects,” Ricardo Anaya, the president of the Permanent Commission, which stands in for Congress during periods of recess, said Wednesday.

This latest step comes after the energy overhaul, which opens the sector to private investment and ends state-owned Petroleos Mexicanos’ 75-year monopoly, was passed by both houses of Congress and approved by 24 of Mexico’s 32 states this month.

The bill needed the green light from the state assemblies because it involved amendments to the nation’s charter.

It will not be signed into law until after President Enrique Peña Nieto, the main proponent of the overhaul, returns later this week from a state visit to Turkey.

Supporters of the overhaul say the participation of major multinational energy companies under profit- and production-sharing contracts and licenses is needed to develop promising deepwater reserves in the Gulf of Mexico and boost sagging oil output.

Production has fallen by a quarter from a high of 3.3 million barrels per day in 2004 due to a sharp decline in output at offshore Cantarell, formerly Mexico’s most productive field, and a lack of investment.

Leftists, however, have vehemently opposed the bill and called its supporters “traitors.”

While supporting efforts to modernize Pemex and the energy industry, they reject constitutional changes they assert would hand the nation’s resource wealth over to private investors.

The proposal to end Pemex’s monopoly, established in 1938 when then-President Lazaro Cardenas nationalized the oil industry, is a thorny issue in Mexico because the state company has long been a symbol of national sovereignty.

Since taking office a year ago, Peña Nieto also has pushed through major changes to the education and telecommunications sectors, as well as a tax overhaul aimed at reducing the federal administration’s dependence on Pemex, which accounts for roughly a third of government revenue.

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