Peña Nieto plans an end to 75-year Pemex monopoly

2013-06-18T00:00:00Z Peña Nieto plans an end to 75-year Pemex monopolyEric Martin, Carlos Manuel Rodriguez and Helder Marinho Bloomberg News Arizona Daily Star

MEXICO CITY - Mexican President Enrique Peña Nieto said Monday he's negotiating support to break the state monopoly over oil and gas exploration and production this year to accelerate economic growth.

In the model envisioned by Peña Nieto, state-owned Pe-troleos Mexicanos would develop certain fields, with others being tapped by foreign and private companies. He declined to discuss details of the proposal, or whether it would require a change in the constitution.

Seventy-five years after his party seized fields from the predecessors to Exxon Mobil and Royal Dutch Shell, Peña Nieto is preparing for the return of international oil companies to arrest eight years of decline in crude output. An opening would probably be broad, from offshore drilling to shale fields similar to those that have revived the U.S. petroleum industry, Peña Nieto said.

"It's obvious that Pemex doesn't have the financial capacity to be in every single front of energy generation," the 46-year-old president said in an interview Monday in London, before traveling to Northern Ireland for meetings with Group of Eight leaders. "Shale is one of the areas where there's room for private companies, but not the only one."

Peña Nieto said his administration will send the energy bill to congress by September, when regular sessions resume, along with a tax proposal. He said he's confident the so-called Pact for Mexico of the country's top three political parties will ensure the bill is approved.

Mexico is seeking to attract capital for deep-water and shale deposits found in the past decade as reserves dwindle in Cantarell, the 1976 oil discovery that ranked among the world's largest.

Still, investors became more skeptical about the depth of the energy reform after it wasn't included in the schedule for special congressional sessions in July and August, saving it for the final four months of the year along with a crowded agenda that includes the tax overhaul and next year's budget.

Peña Nieto's comments boosted confidence that he'll make good on his pledge to open the state-controlled industry, said Ramon Cordova, a currency trader at Banco Base.

"What the market wants is the reforms to pass," Cordova said by phone from San Pedro Garza Garcia, Mexico. The comments "discuss that the energy reform is on a good path and it gives some more information, because up until now it's been very opaque as to what are the actual points that the reform will encompass."

Opening exploration for private investment will help Mexico revive oil production that is heading for its ninth year of decline. Crude output averaged 2.52 million barrels a day this month through June 9, compared with 3.38 million barrels a day in 2004.

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