Mexico's PEMEX enters the 21st century, as senators open the door to foreign expertise and private capital

PRI, PAN show their political muscle in the Senate, routing leftist opposition to constitutional reforms

The name won't change, but the bloated, broke, inefficient state bureaucracy will be replaced by a modern oil company with capital and technology to develop Mexico's vast offshore oil and gas fields

Related story: Dec. 11 - Mexico's Chamber of Deputies wastes no time, approves PEMEX reforms
Guadalajara -
Political history was made tonight on Mexico's Capitol Hill when a a solid majority of the Senate voted to end the state's three quarters of a century old monopoly on the oil exploration and refining industry.

After a day long debate the roll was called at 11:53 p.m. The vote was 95 in favor and 28 opposed.

Petróleos Mexicanos (PEMEX), created when foreign oil companies were expelled and their assets appropriated in 1938, will soon be open to the participation of enterprises from abroad which have the technical know-how and capital to extract natural resources hidden deep below the sea floor. Mexico has neither the cash nor the expertise to do so alone, and it desperately needs its huge hydrocarbon reserves to jump start a seriously faltering economy and stimulate a chronically anemic jobs market.

Mexico has an estimated 30 billion barrels of oil and 500 trillion cubic feet of natural gas which are yet to be developed.

Tonight's vote - rammed through by a coalition of senators from the center right National Action Party (PAN) and the center left Institutional Revolutionary Party (PRI) after a marathon three day session - is a jewel in the political crown of president Enrique Peña Nieto, whose PRI administration celebrated its first year in office a week ago. Peña has staked huge political capital on a series of unprecedented institutional reforms, including education, tax and political ones. All have been approved by the multi-party federal congress. But the daring plan to open Mexico's sacrosanct oil industry, represented by PEMEX, to foreign participation presented the most daunting challenges yet for the 47 year old chief executive, because of the ferocity of the public debate it evoked.

The vote was yet another solid rebuff to Mexico's far Left - the Democratic Revolution Party, the National Regeneration Movement, the Citizens Movement, the Workers Party - which have been unified in opposing almost every proposal on PRI's agenda. PEMEX amendments on legislative "fast track."

The PEMEX reforms were supported overwhelmingly by centrist PAN and PRI senators, while the leftist PRD, PT (Workers Party) and MC members all voted against the constitutional amendments

Senators agreed to amend several provisions of the nation's federal constitution, most notably article 27, in order to eliminate the state monopoly. But the devil is in the details, and the complicated task of resolving many of them remains. In order to implement the constitutional changes new statutes and detailed administrative regulations will have to be drafted, debated and put to a vote. Work on the fine print will begin in early 2014, legislative leaders said.

Since constitutional amendments are involved the legislation is subject to approval by the lower chamber, the Cámara de Diputados, and by a majority of the states of the republic. That process is expected to move swiftly, however, with PRI and PAN deputies firmly allied on the PEMEX reforms.

Acknowledging the work ahead, PAN national chair Gustavo Madero Muñoz told the press yesterday that it will be five years before the first barrel of oil produced with foreign participation is on the market. There are certain to be many more legislative and legal challenges to the PEMEX amendments as well. A PRD spokesman said his party would try to rescind the reforms in a public plebiscite in 2015. On Tuesday PRD filed a complaint with Mexico's Supreme Court, contending that the congress has no authority to modify the oil company's structure by ordinary legislation. But it is highly unlikely the judges will intervene in what is essentially a political dispute characterized by sharp partisan rhetoric.

Update: The Cámara de Diputados voted late today to "fast track" its consideration of the energy reforms, just as the Senate did, without the burdensome process of referring them to subcommittees. The lower house is likely to vote on the PEMEX amendments within the next few days. There is no doubt in anyone's mind that they will be approved, and sent immediately to the 32 state legislatures.

2014
Aug. 30 - PRD's Marcelo Ebrard breaks with Left: "It's too late to undo the PEMEX reforms"
May 6 - MORENA opens campaign to repeal PEMEX reforms

2013
Dec. 20 - PEMEX reforms are now officially the law
Dec. 19 - Apertura energética, el reto del siglo para México
Dec. 16 - San Luis Potosí puts PEMEX reforms over the top
Dec. 15 - Jalisco and all of Yucatán peninsula approve PEMEX reforms
Dec. 13 - Mexican states rush to endorse PEMEX reforms
Dec. 10 - Mexican leftists go to court to stop PEMEX reforms
Dec. 10 - Foreign Policy names Peña Nieto a top Global Thinker
Dec. 7 - Mexico's congress slams through political reforms, as it prepares to take up energy ones
Dec. 2 - Enrique Peña Nieto at one year: a marathon, not a sprint
Nov. 30 - As energy reform vote approaches, PRD exits Pact for Mexico
Nov. 11 - Mexico's far left MORENA achieves official recognition
Nov. 3 - Forbes praises Peña Nieto's "courageous" energy policy
Oct. 7 - López Obrador calls for campaign of protest and civil disobedience over PEMEX reforms

© MGRR 2013. All rights reserved. This article may be cited or briefly quoted with proper attribution or a hyperlink, but not reproduced without permission.