Channel NewsAsia

Mexican president signs landmark energy reform

Mexican President Enrique Pena Nieto signed a package of landmark energy reform bills on Monday (Aug 11), ending the 76-year-old state monopoly on oil drilling and reopening the sector to foreign companies.

MEXICO CITY: Mexican President Enrique Pena Nieto signed a package of landmark energy reform bills on Monday (Aug 11), ending the 76-year-old state monopoly on oil drilling and reopening the sector to foreign companies.

"This represents a historic change that will accelerate the economic growth and development of Mexico in the coming years," the president told hundreds of guests at a ceremony in the capital.

The signing comes five days after the Mexican Senate gave final approval to the laws, the centrist leader's most ambitious political project and the centrepiece of his efforts to kick-start Latin America's second-largest economy.

Pena Nieto argues the nine new laws and 12 amendments will fuel growth, create jobs and modernise state energy firm Pemex, whose oil production has fallen from 3.4 million barrels per day in 2004 to 2.5 million today.

But the leftist opposition accuses the president of gutting Pemex, the country's main source of tax revenue, and betraying the legacy of the 1938 nationalisation of the oil industry. The president rejected that criticism on Monday, saying the reforms "preserve and assure our national property."

Having won the legislative battle, Pena Nieto's administration must now write new regulations for the energy sector, a project the president said would be finished in October.

He also said officials would announce on Wednesday the results of the so-called "Round Zero" rights allocation that will determine which oil and gas fields Pemex keeps and which will be up for international bidding. "That will allow potential national and foreign investors to begin preparing now to take part in the first round of bidding, whose guidelines will be published in the first quarter of next year," said Pena Nieto.

Foreign energy firms including ExxonMobil and BP have been keenly watching the reforms, hiring lawyers and consulting tax experts in anticipation of a return to Mexico - though analysts say there is also wariness over high taxes, corruption and drug violence in the oil- and gas-rich north.

Tweet photos, videos and updates on this story to  @channelnewsasia