Mexico Leader Said To Seek Changes To Break Oil Monopoly

From Bloomberg

Mexican President Enrique Pena Nieto will seek to amend several articles of the constitution to break Petroleos Mexicanos’s monopoly in the state-run oil industry, ruling party President Cesar Camacho said.

Pena Nieto will propose production-sharing contracts for oil exploration and output, Camacho said in a phone interview today. The proposal will seek to change articles 25, 27 and 28 of the constitution, and tenders for the most part would be managed by government regulators, and not by the state-company known as Pemex, two people with direct knowledge of the bill said yesterday. They asked not to be named because the bill will be officially presented later this week.

The overhaul would be the biggest change for the industry since 1938, when President Lazaro Cardenas seized oil fields from British and U.S. companies and changed Mexico’s charter to assert control over its energy resources. Pena Nieto’s proposal also would break the electricity distribution monopoly held by state power company Comision Federal de Electricidad, or CFE, according to one of the people.

The oil reform “will create a world-class company,” Camacho said. “It won’t privatize” Mexico’s oil.

Pena Nieto has pledged to push changes to double Mexican economic growth that’s trailed the regional average in Latin America over the past decade. He made overhauling the nation’s oil laws a centerpiece of his campaign for president last year, saying opening the energy industry to more private investment would be the signature issue for judging his success.

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