MEXICO CITY -- Facing a deeply skeptical nation, President Enrique Pena Nieto will seek in a matter of weeks to usher through a major revision of Mexican energy law that may either turbo-charge the economy or hobble the nation if it falls to defeat or is watered down.
Some experts predict a grand but quick battle.
In a major gamble, Pena Nieto is unlikely to lead a campaign to persuade a doubtful public of the wisdom of the revisions primary goal: letting foreign entities explore and produce oil and gas in association with the sprawling, inefficient state oil giant, Petroleos Mexicanos.
Whip masters in his ruling party appear ready to limit public debate and ramrod the issue through Congress, and then through state legislatures, allowing the constitution to be amended rapidly to permit the investment.
Suggesting that foreigners be allowed to enter the oil sector has long been a third rail of politics in this nationalistic country.
The debate is going to be very short, predicted Tania Ortiz Mena, a vice president at Infraestructura Energetica Nova SAB, a natural gas infrastructure company. Nobody wants to drag this into a one-year discussion.
The proposed revision to the constitution comes at what many here think is a watershed moment for Mexicos most important state company. The central government finances a third of its expenses from oil revenues and Pemex, as the state oil company is commonly known, provides work for 140,000 Mexicans.
But Pemexs crude oil production has dropped steadily for the last decade, and the states demands for its revenues have left little capital available for exploration and production. Analysts warn that the nation might become a net importer of oil by 2020 if foreign companies arent allowed to bring in cash and expertise.
Such an idea, however, runs counter to the nationalistic ideals that are drummed into every Mexican schoolchild. For Mexicans, the modern era begins with the 1938 oil nationalization, when President Lazaro Cardenas kicked out U.S., British and Dutch oil companies. Since then, the national DNA has been programmed to see energy as a national treasure.
We have these dogmas embedded in our hardware: The oil belongs to all of us Mexicans. The petroleum industry is untouchable. Its very sensitive. As soon as the issue comes up, many people get goose bumps, Cesar Camacho, the president of the ruling Institutional Revolutionary Party, told foreign correspondents earlier this month.
By a wide margin, Mexicans think its taboo to open up Pemex. A nationwide opinion poll released in June by the Center for Research and Economic Teaching in Mexico City found that 65 percent of Mexicans oppose privatizing Pemex.
The government has kept almost mum about its energy plans, a sign that it wants to roll out the proposal, perhaps in early September, and move it through Congress quickly, despite public opposition.
Youve got to pass the constitutional reforms in 30 days. If you debate them longer, it grows complicated, said Jesus Rodriguez Davalos, a lawyer with extensive contacts in the government and the energy industry. Rodriguez said he expected Pena Nieto to present a very aggressive, audacious proposal.
In one of his only remarks on the issue recently, Pena Nieto told the Financial Times in mid-June that his proposal would be transformational. Concurrently, unnamed high-level Mexican officials told The Wall Street Journal that the changes would allow foreign energy companies to enter 25-year profit-sharing deals and joint ventures with Pemex. They also would allow foreign companies to explore for oil in Mexico and count the oil they found as company assets.