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Latino Daily News

Sunday December 22, 2013

Mexican President Signs Energy-Overhaul Bill

Mexican President Signs Energy-Overhaul Bill

Photo: Enrique Peña Nieto

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President Enrique Peña Nieto signed an energy-overhaul bill here Friday that amends Mexico’s constitution to allow private companies to develop crude reserves for the first time since 1938.

The signing ceremony took place at the National Palace and was attended by legislators and high-ranking officials.

The overhaul still must be published in the official gazette and will take effect a day later, although secondary legislation related to the constitutional changes remains pending.

After signing the bill, Peña Nieto said the overhaul “is one of the most transcendent in recent decades” because “it will help Mexico face the challenges of the 21st century.”

The president added that it creates “an advanced legal framework” that will make hydrocarbons “an authentic source of economic growth.”

The initiative, unveiled in August, faced staunch opposition from the left, which says it supports efforts to modernize state oil monopoly Petroleos Mexicanos but rejects the involvement of private capital in Mexico’s oil and gas industry.

Even so, the governing Institutional Revolutionary Party, or PRI, and the conservative opposition National Action Party, or PAN, were able to muster the two-thirds majority required to change three articles of Mexico’s charter and end Pemex’ 75-year-old monopoly.

The bill was given the green light this week by a majority of Mexico’s state legislatures, which was also a requirement because of the constitutional amendments.

The government does not expect private companies to begin developing Mexico’s crude reserves until 2015.

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.

The move to end Pemex’s monopoly, in place since the company was created in 1938 as part of then-President Lazaro Cardenas nationalization of the oil industry, is a thorny issue in Mexico because the state-owned firm has long been a symbol of national sovereignty.

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