Friday, August 9, 2013

Pena Nieto delays Mexico energy bill amid party negotiations

Mexican leader Enrique Pena Nieto speaks during an interview at the Los Pinos presidential residence in Mexico City in July 2013. (AP Photo/Dario Lopez-Mills, File)

By Eric Martin and Adam Williams
Bloomberg News

President Enrique Pena Nieto will delay the announcement of his proposal to end Mexico?s seven-decade state energy monopoly until next week, he said today in a statement posted to his Twitter page.

?I continue to prepare the presentation of the energy reform that will stimulate national development,? he said in a statement confirmed by the presidential press office. ?I?ve decided to announce it next week.?

The delay comes as political parties extend negotiations, said a person who isn?t authorized to speak publicly about the president?s plans. Francisco Arroyo, a lawmaker with Pena Nieto?s ruling party and speaker of the lower house, said in a Radio Formula interview that the bill will be pushed back a few days to reach the ?broadest consensus possible.?

Pena Nieto is seeking to change the constitution to allow companies such as Exxon Mobil Corp. and Chevron Corp. to pump crude in the nation with Latin America?s third-largest proven oil reserves for the first time since 1938, the president of the ruling Institutional Revolutionary Party Cesar Camacho said in an interview yesterday. A more aggressive proposal delivered last week by an opposition party is increasing Pena Nieto?s chances of pushing the bill through Congress, according to Nomura Holdings Inc.

?Although we?d like to have the reform approved as is, it?s obvious that won?t occur,? Camacho said by telephone. ?It?s necessary to listen to many voices and for the legislators to come to an agreement on the essential topics.?

Pena Nieto said yesterday he was planning to present the bill this week.

Peso Slides

Mexico?s peso fell 0.5 percent to 12.6857 per U.S. dollar at 12:10 p.m. in Mexico City, the biggest decline among 16 major currencies tracked by Bloomberg. The proposal?s delay is ?seen in a very bad light,? said Roberto Galvan, a currency trader at Intercam Casa de Bolsa SA in Mexico City. ?Everyone expected that today it would be presented.?

Galvan said a delay suggests that there?s been some problem in the negotiations between political parties even as it remains a top priority for Pena Nieto. The Democratic Revolution Party, or PRD, which has said it opposes changing the constitution, will present its own energy proposal this week.

Pena Nieto delayed the bill ?in order to negotiate with the PRD,? Jorge Chabat, a political scientist at the Center for Economic Research and Teaching, a Mexico City-based university, said in a phone interview. ?It?s the only explanation,? Chabat said. ?I think this favors Pena Nieto?s proposal. It allows more time for the bill to be hammered out.?

Production Sharing

The bill to loosen state-owned Petroleos Mexicanos?s grip on crude output and attract investment would be the economy?s biggest overhaul since the North American Free Trade Agreement in 1994.

Pena Nieto, a 47-year-old former governor who took office in December, will propose production-sharing contracts for oil exploration and output, while drawing the line at offering private companies equity stakes in concessions, Camacho said. He declined to say which constitutional articles would be modified.

Exxon, the world?s most valuable energy company, Chevron and Spanish oil producer Repsol SA are among companies that have expressed interest in Mexico?s oil fields. Alan Jeffers, an Exxon spokesman in Irving, Texas, wasn?t available for comment, an assistant said by phone yesterday.

A press official who isn?t an authorized spokesman for Pemex, as Petroleos Mexicanos is known, said the company won?t comment until Pena Nieto?s proposal is released.

Source: http://fuelfix.com/blog/2013/08/07/pena-nieto-delays-mexico-energy-bill-amid-party-negotiations/

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