Mexico’s Congress targets state oil, gas monopoly

MEXICO CITY – After contentious marathon sessions, Mexico’s Congress on Thursday gave final approval to a historic energy reform bill that ends the 75-year state monopoly of the country’s oil and gas industry and invites foreign investment.

In a dramatic shift, Mexico’s bloated state petroleum giant may soon have to compete with major U.S. and other multinational firms in the exploration of what are believed to be vast oil and gas reserves.

The government of President Enrique Pena Nieto said the change would boost lagging oil production and breathe life into a sluggish economy. But leftist lawmakers and many Mexicans vehemently oppose the move, which they see as surrendering precious natural resources to foreigners.

The lower chamber of Congress, the Chamber of Deputies, gave final approval to the bill, 353 for and 134 against, after 20 hours of debate and amid opponents’ cries of “Traitors!” Barely 48 hours earlier, the Senate had done the same.

Because the bill requires changing the constitution, it must now be approved by at least 17 of Mexico’s 31 state legislatures, which government officials said is likely.

Under the bill’s complicated provisions, private oil companies, including the big U.S. conglomerates, would be allowed to enter into “production-sharing” agreements with Mexico. They would be able to drill for oil and take a cut of the crude produced under licensing agreements and contracts.

Proponents say another advantage is the outside expertise Mexico will gain to reach more technically demanding deepwater reserves and shale deposits, which Mexico’s Petroleos Mexicanos (Pemex) has been unable to exploit. Two of its main shallow-water wells are running dry.

But opponents don’t trust the ruling Institutional Revolutionary Party, or PRI, with its long history of corruption, to oversee such drastic changes.

“This isn’t the reform of the century, it’s the robbery of a millennium,” lawmaker Ricardo Monreal said.

Members of the Chamber of Deputies were forced to hold a voice vote on the bill in an alternative location because members of leftist parties had blocked access to the main congressional chamber.

Passions ran high and the voting occurred amid pushing, shoving and the hurling of insults.

Two female lawmakers came to blows; a male representative, Antonio Garcia Conejo, stood on the podium and stripped down to his skimpy black briefs to call attention to the “stripping” of Mexico’s natural wealth and dignity.

Supporters of the bill were able to use a parliamentary maneuver to call a vote of the full lower chamber without first allowing committees to consider the proposal. That led to complaints that the measure was being rammed through, with many members not even having time to read its contents.

The left has promised to call a national plebiscite in an effort to overturn the measure, but some supporters have argued that the constitution prohibits such a move.

Pena Nieto and the PRI received crucial support from the conservative National Action Party, which pushed for the bill to include provisions even more attractive to investors than what the president originally sought.

Pena Nieto on Thursday tweeted his pleasure with passage of the law, which he termed “a fundamental transformation” that “will promote productivity, economic growth and the creation of jobs.”

But it comes at a political price. Jesus Zambrano, president of the leftist Democratic Revolution Party, one of the main opponents, said his faction would no longer participate in the so-called Pact of Mexico, a much-vaunted political accord that bound major parties to work together on legislation.

“The pact is dead,” Zambrano said in a meeting with foreign correspondents. “That famous ‘Mexican moment,’ ” he said, alluding to some of the positive rhetoric that has emerged in some quarters in connection with this government, “is kaput.”