Final package of bills for energy overhaul passed by lower senate in Mexico

Mexico's lower house concluded early Saturday the process of debating and approving the secondary legislation needed to implement last year's energy overhaul, which opens the oil sector to private investment. The president of the Chamber of Deputies, Jose Gonzalez Morfin, brought a close to the session that began Monday and lasted nearly 74 hours. The lawmakers passed nine new bills and modified numerous other measures that will regulate all aspects of the energy sector. Early Saturday, the legislators passed the final two packages of bills, which establish a new fiscal regime for the hydrocarbons sector and a stabilization and development fund. They now go to the Senate but could return to the Chamber of Deputies if modified since those measures originated in the lower house. The so-called Hydrocarbon Revenues Law contains, among other things, sections pertaining to fees and royalties to be paid to the government for the performance of exploration and production of hydrocarbons. Meanwhile, the so-called Law of the Mexican Oil Fund for Stabilization and Development envisions the establishment of a trust to receive, administer and distribute revenues deriving from the assignations and contracts for hydrocarbon exploration and production. One key bill approved Saturday was a measure allowing the federal government to assume a portion of the pension liabilities of state-owned oil giant Petroleos Mexicanos and state-owned electricity provider CFE, which amount to some 1.6 trillion pesos ($121.3 billion), with a view to enabling those companies to compete with private-sector rivals. Last year's energy overhaul, which modified three articles of Mexico's constitution and was promulgated on Dec. 20, 2013, after being ratified by 24 of the country's 31 state legislatures, ended Pemex's decades-old monopoly over the oil sector. Mexico's crude production has fallen by nearly a quarter from a high of 3.3 million barrels per day in 2004 due to a sharp drop in output at offshore Cantarell, formerly Mexico's most productive field, and a lack of investment. The historic energy overhaul, enacted last year, is aimed at reversing that decline by allowing private companies to develop crude reserves for the first time since 1938. Supporters of the overhaul argued that the participation of major multinational energy companies under profit- and production-sharing contracts and licenses is needed to develop promising deep-water reserves in the Gulf of Mexico. The secondary legislation has been debated by the Mexican Congress in an extraordinary session that began on July 17.