Mexico: Mexico's rightist party to block energy bill if no oil licensing

Mexico's rightist PAN opposition party is willing to kill any energy reform proposition that does not include the liberal changes they are seeking, inclunding E&P licensing.

From his office in Mexico's senate, Jorge Luis Preciado, the PAN's coordinator in the upper home, told BNamericas they were not willing to negotiate on a watered-down energy proposition.

"If it does not go our way, we won't go" with the ruling PRI party, Preciado said. His party was recently irked by the PRI's passage of a tax reform in the senate, which they say will stunt economic increase.

As presented by the PAN in August, their energy proposition looks to break oil and electric power monopolies through a licensing scheme in E&P administered by upstream watchdog CNH, concessions in midstream and downstream via energy regulator CRE and creation of a sovereign oil fund, in addition to other measures.

POWER TO THE PAN

Next losing the presidency and large portions of both houses of congress in 2012 elections, the PAN is poised to sway the outcome of President Enrique Peña Nieto's most significant reform in his early term.

Peña Nieto's PRI needs two-thirds support in both houses of congress to pass a constitutional reform. In the senate, the PRI would need 35 of the PAN's 38 votes to advance the bill into the lower home.

The left-wing PRD has vowed to vote against any constitutional reform on energy but does not have the votes to stop one.

Preciado expects his PAN party to vote as a unified block. "We're all in agreement and we have a solid support of the whole party."

The PAN is demanding the PRI initial approve a political-electoral reform, which fortifies federal transparency bodies and consolidates national electoral bodies into one federal unit.

"We won't begin any type of negotiation [on energy reform] until the political-electoral issue has concluded," said Jorge Luis LaValle, a PAN senator from Campeche, the hub of national oil company Pemex's offshore operations, and member of the senate's energy commission.

WILL THE PRI BUDGE?

Despite a statement from the Wall Street Journal claiming the PAN and PRI were putting together a joint energy bill, LaValle says his party is not interested in discussing the PRI bill. "That's not what we're going to debate. We're going to aim for the PAN proposition to be approved."

Peña Nieto said his bill, which came out in September, would limit E&P contracting to profit sharing. But recently, his government has loosened it stance.

Speaking before congress, energy minister Pedro Joaquín Coldwell said the initial step in energy reform was "a new contracting scheme" but did not cite a specific type of contracting. He as well called for creation of a sovereign oil fund, a PAN measure not before mentioned by the minister.

Mexico's economic outlook took an extra downturn this week and is only expected to grow between 0.9% and 1.4% in 2013 compared to the previous estimate of 2% to 3%. Senator Preciado said this makes the energy bill all the additional significant.

"What can save the economy? Energy reform. Nothing else."