Oil & Gas - Mexico - Pe?a Nieto position signals advance in party's Pemex stance, says lawmaker

By David Biller?/?Business News Americas

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Mexican opposition party PRI presidential candidate Enrique Pe?a Nieto's support of liberalization in the oil sector in line with that of Brazil's federal energy company Petrobras (NYSE: PBR) represents a step forward for a party that has held Pemex back in the past, PAN lawmaker and president of the lower house's energy committee, Felipe de Jes?s Cant?, told BNamericas.

"There is a lot to advance, but the federal government has been unable to achieve it because the PRI has held swinging stances due to ideological reasons. Now that Pe?a Nieto has made pronouncements that private participation in Pemex should be increased, the stance has changed a little. That is my hope, that something could be done in some legislative areas to achieve better conditions for the country, which it needs," he said.

The lawmaker specifically highlighted the prospect of reforming Pemex's fiscal regime to exclude the state oil company from the federal spending budget while still contributing to government finances through taxes.

There could be "substantial" advances to incorporate additional private investment during the 1H12 campaign season even without additional legislative reform, Cant? said. For example, the current legal framework would permit private players to take oil from Pemex, refine it, and return all oil products to the NOC.

His left-wing colleagues in the legislature, however, vehemently disagree and, given the near-certain constitutional challenge that would ensue were a private company to undertake such a project, he knows interest will remain slim until legal security is reinforced.

"If the complementary legal conditions are not definitive, they will always be exposed to challenges. That is why I think there has been a cowardly attitude on the part of the federal government and particularly Pemex to be able to grow," he said.

The PRI opposed the aspects of President Felipe Calder?n's 2008 energy reform proposal that would have allowed private refining and transport. The reform's final product was widely viewed as watered-down, and its main achievement was incentive-based contracts for services.

Brazil's government controls Petrobras, which issues shares, and private oil companies in the country are allowed to operate fields and book reserves. Pemex has no shareholders and private firms are barred by the constitution from booking reserves.

The PRI has controlled the lower house since 2010, and has 239 of the 499 seats. Mexico holds presidential and congressional elections in July 2012.

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