Mexico set to implement historic oil reform

Mexico moved a step closer Wednesday to implementing a historic energy reform that will open the state-controlled sector to foreign investment for the first time since 1938.
The Senate voted 90-27 to give preliminary approval to the enabling laws that will break the monopoly held by state-run energy giant Pemex since foreign companies were kicked out of Mexico 75 years ago.
The senators were expected to vote later Wednesday on the last details of legislation, which is the centerpiece of President Enrique Pena Nieto's reform drive to breathe new life into Latin America's second biggest economy.
The lower house already approved the energy bills, which will head to Pena Nieto's desk for his signature if the Senate votes for all of it without changes.
"Mexico can't stay as it is. Mexico must change to combat poverty and inequality, which is why we want to increase oil profits," said Senator David Penchyna of the ruling Institutional Revolutionary Party (PRI).
The government argues that the legislation will boost growth, create jobs and reverse declining oil production.
But the leftist opposition says the reform amounts to a damaging privatization of Pemex, the country's main source of tax revenue and a symbol of national sovereignty.
"Our dear Mexico is becoming more and more like a restaurant where foreign customers can enjoy our energy resources without limits and almost for free," said Senator Fernando Mayans Canabal of the leftist Democratic Revolution Party (PRD).
- Oil firms eye reform -
The constitutional reform was approved in December with the backing of Pena Nieto's centrist PRI and the conservative National Action Party (PAN).
To be enacted, the Congress needs to pass "secondary laws" that outline how contracts will be offered, among other things.
Major oil companies have kept a close eye on the legislation, with US giant ExxonMobil and British rival BP leading an "energy task force" within the American Chamber of Commerce of Mexico.
The reform will allow foreign companies to sign profit-sharing contracts with Mexico as soon as next year and drill for oil and natural gas.
The government says the reform will allow Mexico to obtain the technology to drill for shale gas over land and deep-water oil in the Gulf of Mexico.
The legislation will reduce Pemex's tax burden and compensate landowners by offering them three percent of profits earned from oil or gas extracted from their properties.
One of the most controversial measures calls for the government to absorb a portion of the Pemex worker union's unfunded pension liabilities. The company and workers would then have to renegotiate their labor contract.
Opponents say the government would incur new debt that will have to be repaid by taxpayers.
"The Mexican people have already paid too much," said PRD Senator Dolores Padierna Luna. "Don't burden them with more debt that is of your own doing."