As part of beginning a long, arduous move to open up Mexico's energy industry, Mexican Senate on December 11, 2013 voted to open the sector to private investment, a victory to President Enrique Pena Nieto's year-old drive to reform education, telecom and $92 billion oil industry. Senators from Institutional Revolutionary Party (PRI) and National Action Party (PAN) supported the measure, while left-leaning Party of the Democratic Revolution (PRD) opposed the move. Later thousands of opposition supporters rallied at the Reforma Avenue against the move. The measure now goes to the lower chamber of Congress. The measure approved by the Senate calls for:
* State-run Petroleos Mexicanos, or Pemex, to allow profit-sharing contracts, production-sharing contracts and licenses under which companies will pay royalties and taxes for the rights to explore and drill.
* Private companies to be paid in cash for profit-sharing contracts.
* Oil barrels to be distributed according to yet unknown formula among companies and the government as part of production-sharing contracts.
Contracts will be made with the state rather than with the Pemex, which is ranked ninth largest oil company in the world, but has stumbled in recent days because of endemic corruption, mismanagement, and lack of technological upgrades in its infrastructure to reach the new off-shore and on-shore oil deposit in the deep underground.
The bill was passed by the lower house of Congress, Chamber of Deputies, by 354-134 votes on December 12, 2013.The legislative action by both houses of Congress set in motion to reverse a 75-year history of state monopoly over oil as the then-President Lazaro Cardenas ousted all foreign oil companies from Mexico and seized their assets on March 18, 1938, a date still revered by Mexicans and ingrained in national psyche as a lofty symbolism of patriotism.
To become the law of the nation, the measure is now have to be approved by 17 of 31 states.
The measure won the backing of more than half of the states within three days, and in a swift and historic action, President Enrique Pena Nieto signed the bill on December 20, 2013. Now, Congress needs to work on legislation on how the government will manage the contracts and oversee profit-sharing, and the opposition PRD has until 2015 to promote a referendum to overthrow the law. Congressional draft on profit-sharing and contract-managing will be completed in three months. This bill is of huge importance to Mexican economy as reforms have been long overdue to the oil sector as the oil production has dropped by 25 percent since 2004.
President President Enrique Pena Nieto's signed the final measure on August 11, 2014.
Lackluster Response in the First Stage of Bidding
In reflection of a sense of weariness on Mexico's regulatory and oversight regime, many foreign energy companies stayed away from the first round of the bidding process on July 15, 2015 for 14 separate drilling blocks along Mexico's Gulf Coast. At the end, only 2 of 14 blocks were successfully bid, with the rest getting either no bid or incomplete requirements in the (bidding) process. Government's next bidding will take place on September 30, 2015.
* State-run Petroleos Mexicanos, or Pemex, to allow profit-sharing contracts, production-sharing contracts and licenses under which companies will pay royalties and taxes for the rights to explore and drill.
* Private companies to be paid in cash for profit-sharing contracts.
* Oil barrels to be distributed according to yet unknown formula among companies and the government as part of production-sharing contracts.
Contracts will be made with the state rather than with the Pemex, which is ranked ninth largest oil company in the world, but has stumbled in recent days because of endemic corruption, mismanagement, and lack of technological upgrades in its infrastructure to reach the new off-shore and on-shore oil deposit in the deep underground.
The bill was passed by the lower house of Congress, Chamber of Deputies, by 354-134 votes on December 12, 2013.The legislative action by both houses of Congress set in motion to reverse a 75-year history of state monopoly over oil as the then-President Lazaro Cardenas ousted all foreign oil companies from Mexico and seized their assets on March 18, 1938, a date still revered by Mexicans and ingrained in national psyche as a lofty symbolism of patriotism.
To become the law of the nation, the measure is now have to be approved by 17 of 31 states.
The measure won the backing of more than half of the states within three days, and in a swift and historic action, President Enrique Pena Nieto signed the bill on December 20, 2013. Now, Congress needs to work on legislation on how the government will manage the contracts and oversee profit-sharing, and the opposition PRD has until 2015 to promote a referendum to overthrow the law. Congressional draft on profit-sharing and contract-managing will be completed in three months. This bill is of huge importance to Mexican economy as reforms have been long overdue to the oil sector as the oil production has dropped by 25 percent since 2004.
President President Enrique Pena Nieto's signed the final measure on August 11, 2014.
Lackluster Response in the First Stage of Bidding
In reflection of a sense of weariness on Mexico's regulatory and oversight regime, many foreign energy companies stayed away from the first round of the bidding process on July 15, 2015 for 14 separate drilling blocks along Mexico's Gulf Coast. At the end, only 2 of 14 blocks were successfully bid, with the rest getting either no bid or incomplete requirements in the (bidding) process. Government's next bidding will take place on September 30, 2015.
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