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 News Around the Republic of Mexico | February 2008 
Mexico's Plan to Open Oil Industry Lacks Support
 Carlos Manuel Rodriguez & Adriana Lopez Caraveo - Bloomberg
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 |  | We may start in ultra-deep waters near the international border, where the United States is already drilling. Most of us, I wouldn't say all, believe we should do something about border fields.
- Senator Francisco Labastida |  | | | |
Mexican President Felipe Calderon's plan to overhaul energy laws and allow private investment in the state oil monopoly lacks political support, a prominent opposition senator said.
Senator Francisco Labastida of the Institutional Revolutionary Party, an opposition group, said "there's no chance" that "comprehensive reform" will pass. He spoke in an interview today at the senate building in Mexico City.
Failure to open the oil industry may mark the biggest political defeat yet for Calderon, who managed to win support for cutting pensions and raising taxes since taking office in December 2006. Mexico, the third-largest oil supplier to the U.S., needs the help of foreign and private companies to halt a decline in crude output and reserves, Calderon has said.
Cantarell, the nation's largest oil field, is running out of crude. Taxes that exceed half of sales at state oil company Petroleos Mexicanos cut into its ability to invest in production.
Labastida, head of the Senate Energy Committee, said a narrower proposal to allow Petroleos Mexicanos, or Pemex, to form alliances in offshore fields near the U.S. border faces less opposition and may pass. Such alliances would have to be with other government-controlled companies such as Petroleo Brasileiro SA or StatoilHydro ASA, he said.
"We may start in ultra-deep waters near the international border, where the United States is already drilling," Labastida said. "Most of us, I wouldn't say all, believe we should do something about border fields."
By doing so, Pemex would acquire the technology it needs to expand to other parts of the Gulf of Mexico, the senator said.
The Institutional Revolutionary Party, or PRI, believes that Petroleos Mexicanos may be able to raise capital by selling equity-like securities in certain subsidiaries to Mexican investors, he said.
To contact the reporter on this story: Adriana Lopez Caraveo in Mexico City at adrianalopez(at)bloomberg.net; Carlos Manuel Rodriguez in Mexico City or Crodriguez17(at)bloomberg.net
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