Mexico Congress Passes Controversial Pro-Pemex Bill

The lower house of the Mexican parliament has passed a controversial bill that will give state-owned oil major Pemex more sway over the Mexican fuel market.

Bloomberg reports that the house voted 301 in favor and 147 against the proposal, which will remove a stipulation from an earlier law that requires the state energy market regulator CRE to prioritize fuel sales from private companies as a way of leveling their playing field with Pemex. According to the backers of the change, the field is level enough for the state-help provision to be removed. The bill now needs to pass through the Senate.

The bill is part of efforts by the Lopez Obrador government to reinstate Pemex as the monopoly on the local energy market. Last year, as part of efforts to return control of the energy industry to the state's hand, the AMLO government also drafted an infrastructure plan that, according to the head of the country's oil industry association, would close the door to foreign oil companies willing to work in Mexico's hydrocarbons industry.

Earlier this year, Mexico's Supreme Court stopped another set of changes proposed by AMLO, this time regarding the electricity market, saying the changes would prioritize state-owned utility CFE over private companies, and that was unconstitutional.

The bill that the Senate is currently deliberating involves proposed changes to the current energy legislation that will give the government the power to restrict the activity of private companies in crude oil and fuel imports. The country's antitrust regulator warned that such changes would negatively affect competition on the Mexican fuels market, but the lower house still voted in favor of the bill.

"Conditions for private sector operators could become much more complicated, and Pemex could perhaps undercut the competition," one Mexico City-based analyst told Bloomberg about the latest vote on energy law changes.

By Charles Kennedy for Oilprice.com

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