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Mexico's president signs historic energy reform
Mexican President Enrique Pena Nieto signed into law a sweeping reform that will allow private companies to drill for oil and gas, and end a seven-decade-long monopoly held by the state oil company
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exican President Enrique Pena Nieto signed into law a sweeping reform that will allow private companies to drill for oil and gas, and end a seven-decade-long monopoly held by the state oil company.
Mexican law previously restricted such work to Petroleos Mexicanos, or Pemex, in constitution articles that have long been considered sacred. The monopoly was seen as safeguarding the country's patrimony from foreign exploitation after the Mexican Revolution.
Pena Nieto said the new energy laws and other reforms have strengthened confidence in Mexico, citing them as the reason Standard & Poor's raised the country's credit rating one step to BBB+.
"We, Mexicans, have decided to set aside myths and taboos, to take a big step forward," said Pena Nieto, who argues that Mexico needs the foreign companies' expertise and technology to exploit its vast reserves.
He called the energy bill "a fundamental, historic reform" needed for Mexico to speed up the lagging pace of its economic growth.
The bill was approved by both houses of Congress last week, and in fewer than three days it received the backing of a majority of Mexico's states legislatures, a condition needed for any constitutional changes.
The laws will allow private contracts for profit- and production-sharing with companies like Exxon Mobil and BP to explore and drill for oil and gas that Mexico hasn't been able to tap. Mexico's Energy Department will also be able to auction oil and gas licenses, mostly for deep-water projects, and then collect taxes and royalties from companies for the amount extracted.
Private contracts had been banned since the oil industry was nationalized by President Lazaro Cardenas in 1938.
