Mexican Senate votes to privatize oil industry

The landmark bill, which was quickly denounced by leftist parties, must still pass the lower house

Mexico's Democratic Revolution party (PRD) lawmakers occupy the chamber of deputies on Dec.11, 2013 in Mexico City. Leftist lawmakers locked themselves inside Mexico's chamber of deputies Wednesday to prevent the lower house from debating a controversial oil reform bill that passed the Senate hours earlier.

Mexico's Senate on Wednesday overwhelmingly approved an energy reform to permit the biggest oil industry opening in 75 years, sending it to the lower house where leftists padlocked doors to the chamber to stop lawmakers from debating the bill.

The reform in the world's 10th largest oil producer, backed by the ruling Institutional Revolutionary Party (PRI) and the opposition conservative National Action Party (PAN), was sent to the lower house for debate and final approval.

The government aims to pass the bill this week, but after it arrived in the lower house, leftists occupied the speaker's podium and piled up chairs to block access routes to the chamber and sealed other doors with chains and padlocks.

The stalling tactics by leftists are unlikely to do more than cause a slight delay in approving the bill, which passed the Senate with more than two thirds of the lawmakers' votes.

If the bill is passed by the lower house, it would then need to be approved by the legislatures of 17 of Mexico's 31 states.

The overhaul would be the crowning piece of President Enrique Pena Nieto's first year of reforms, which have also targeted education, the tax system and telecommunications. But the energy overhaul is considered most crucial to the overall economy and the remaining five years of Pena Nieto's presidency.

Under the legislation, contracts could be made directly with the state rather than with the state-run oil company, which would lose its monopoly on Mexican oil. The bill would allow contracts for profit- and production-sharing as well as licenses under which companies would pay royalties and taxes to the Mexican government for the right to explore and drill.

Private companies would have to specify in contracts that all oil and gas found belongs to Mexico. The constitution would continue to prohibit oil concessions, considered the most liberal kind of access for private oil companies.

Bitter debate

As the Senate gave the bill the green light, senators from the leftist Party of the Democratic Revolution (PRD), which is fighting to stop the bill, shouted "Ask the people.” PRI and PAN senators replied by punching the air to cries of "Mexico."

"We have a good reform for Mexico," David Penchyna, a PRI lawmaker who heads the Senate energy committee, told Reuters after the vote. "Let us imagine a more productive country, with more competition, more transparency and less corruption."

Outside the Senate, which is cordoned off with metal barriers, a few demonstrators had railed against PRI senators who were projected onto a screen defending the bill.

One hand-penned white poster taped to the barricades accused lawmakers of selling out the country and likened the bill to the Spanish conquest of Mexico in the 16th century.

"The Spanish came to steal the yellow gold for trinkets. The gringos are coming for the black gold ... Are you going to stay silent?" it read.

Polls have shown a wide range of opinion on the issue.

A survey published in June by the Mexico City-based CIDE university showed the 65 percent of Mexicans opposed foreign investment in the oil industry.

Another poll by the newspaper Excelsior in August showed 63 percent backed Pena Nieto's plans to change the constitution to allow more private investment in the energy industry.

Jesus Zambrano, leader of the PRD, said the government faced a long fight over the bill and pledged to carry his opposition into the mid-term election year of 2015.

Speaking to a crowd of hundreds next to the Angel of Independence, the victory column on Mexico City's famous boulevard, Paseo de la Reforma, Zambrano pledged to turn the bill into a vote on Pena Nieto's administration.

"Our strategy now will be from 15 to 15, from the end of this period of Congress (Dec.15) to 2015," he said, before turning to the referendum question. "I'm sure people will take part in it as though it were a presidential election."

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