Mexico’s Congress approved a bill to end a 75-year state oil monopoly and generate as much as $20 billion in additional foreign investment a year.
The nation’s most significant economic reform since the North American Free Trade Agreement secured the required two-thirds majority in a 353-134 lower-house vote yesterday. The proposal must be ratified by state assemblies, the majority of which are controlled by the alliance backing the reform.
The bill will change Mexico’s charter to allow companies such as Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX) to develop the largest unexplored crude area after the Arctic Circle. Supporters say the overhaul could propel Mexico into the top five crude exporting countries while opponents say it will funnel resource wealth to foreign investors. The peso gained.
“The reform will energize Mexico’s economy,” Carlos Capistran, chief Mexico economist at Bank of America Corp., said in a telephone interview yesterday. “Congress was able to pass a better-than-expected constitutional reform.”
Producers will be offered production-sharing contracts or licenses where they get to own the pumped oil and will be allowed to log crude reserves for accounting purposes.
The rest here.