Historic Bill Privatizing Mexico's Oil Industry Passed By Both Houses, Just Provisions Pending

Mexico's lower house of Congress gave general approval to historic legislation that would open the state-run oil industry to private investment, but final passage was delayed by a debate on its provisions that continued throughout the night and past dawn on Thursday.

Just hours after the measure passed the Senate Wednesday on a 95-28 vote, members of the House of Deputies took up the bill after overriding attempts by leftist opponents to block discussions.

They voted 354-134 to give general approval to the proposal just before midnight, but continued in a marathon session of debate on hundreds of challenges to individual sections of the bill before a final vote.

The lawmakers in favor say it's needed to revamp Mexico's moribund, state-run oil industry. Production is on the decline and the state-run Petroleos Mexicanos, or Pemex, hasn't had the finances or expertise needed to tap the country's vast deep-water and shale reserves.

Opponents say it would be a return to the days of foreign oil companies profiteering from Mexico's patrimony and a betrayal of the people of Mexico.

Two of the country's three main parties are backing the bill, which would allow the government to grant contracts and licenses for exploration and drilling to multinational firms, something currently prohibited by Mexico's constitution.

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

Dozens of legislators signed up to speak when debate began Wednesday night on the floor of a makeshift chamber after a group of leftist lawmakers seized control of the House of Deputies, using chairs and tables to block access to the chamber in a failed attempt to block discussion of the measure.

"The homeland is not for sale! The homeland is to be defended!" they shouted while holding protest signs and Mexican flags.

Legislators convened in a room nearby, however, and voted for the body to immediately begin debating the bill and bypass studying it in committees.

The bill is 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 government rather than with Pemex, ending 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.

Opponents of the reform argue that Mexico's people should decide on such a momentous change.

"We want a referendum on this," said Congressman Alejandro Sanchez, a member of the leftist Democratic Revolution Party, or PRD.

Analysts contend Mexico needs to let in private investment to save its oil sector. While oil output has been rising in the U.S. and Canada, Mexico's production has fallen 25 percent since 2004 despite increased investment.

Operations by private companies that would be allowed by the bill have been prohibited since 1938, when President Lazaro Cardenas nationalized the oil industry, a step written into the constitution to protect the country from possible profiteering by foreign companies.

Based on reporting by the Associated Press.

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