MEXICO CITY -- President Enrique Pena Nieto offered a proposal Monday to open Mexico’s oil and gas industry to foreign investment.
He began selling it to a reluctant nation by saying the move would lower electricity costs, create jobs and revive Mexico’s status as a global energy power.
Flanked by much of his Cabinet, Pena Nieto said the plan would revitalize the oil and gas industry without selling out the giant state oil company to foreign interests.
“Mexican families will feel in their pocketbooks the benefits,” Pena Nieto said, “of our economy returning to faster levels of growth than at any time in decades.”
The proposal was narrower in scope than some in the energy industry had sought. It offers foreign companies the chance to sign profit-sharing contracts to explore for and produce oil and natural gas, but it bars them from keeping some production for themselves.
That moderation figures to clear the way in the Mexican Congress and state legislatures for a historic change to the country’s economy.
“I don’t think they went far enough with this proposal. It’s limited,” said Daniel Kerner, the director for Latin America at Eurasia Group, a global risk consultancy based in New York.
Pena Nieto may see his six-year presidency ride on the outcome of the energy proposal, which he said would create millions of jobs and boost economic growth in a nation that’s one of the world’s top 10 oil producers.
The plan calls for amending two key articles of the constitution to allow foreign companies to explore for and produce oil and gas in profit-sharing arrangements with the state oil giant, Petroleos Mexicanos, known as Pemex, while keeping the company “100 percent” in state hands.
“The country remains the sole owner of petroleum reserves . . . and of the great company that is Petroleos Mexicanos,” Pena Nieto said in his announcement. That addressed fears that the proposal would dilute control of one of the largest companies in Latin America and one that many Mexicans see as a national jewel, formed after the takeover of foreign oil companies in 1938.
Energy Secretary Pedro Joaquin Coldwell laid out a bleak analysis of Mexico’s energy decline. He said Mexico had seen its production fall by 835 million barrels a day in the past eight years, ebbing to the current 2.5 million barrels per day. It now imports a third of the natural gas it needs.
“We need capital, technology and knowledge,” Joaquin Coldwell said. “We must associate with those who have them.”
The government relies on Pemex for roughly a third of its revenues, a dependence that’s drained the company of funds.
In recent weeks, Pena Nieto’s Institutional Revolutionary Party repeatedly has changed the date for the launch of the energy proposal, a sign that party leaders were horse-trading with legislators to sweep away opposition.
The constitutional amendments must pass by a two-thirds vote in both chambers of Congress, then by a majority of state legislatures, to be enacted.
Aurelio Nuno Mayer, the president’s chief of staff, said he thought the constitutional amendments and secondary legislation would be approved by the end of the year.
Pena Nieto, 47, broke from the three-party Pact for Mexico he helped establish on taking office last Dec. 1. He offered the proposal in his party’s name, a sign that the political left still finds relaxing the state’s grip on energy exploration and production deeply unpalatable.