Mexican Parties Agree to Break Pemex Refining Monopoly

Mexican President Enrique Pena Nieto and leaders of the nation’s three largest parties agreed to work toward allowing competition for some of Petroleos Mexicanos’s operations and revise mining royalties.

Mexico will make “the necessary reforms to create a competitive environment in the economic processes of refining, petrochemical, and transportation of hydrocarbons,” according to a document signed by the new president and the heads of Mexico’s three largest political parties.

In 2008, former president Felipe Calderon proposed a bill that would’ve allowed state oil company Petroleos Mexicanos to partner for deep-water projects and private companies to build refineries in Mexico. Congress instead gave the company known as Pemex leeway to hire companies without granting these outside firms the ability to market Mexican crude and rebuffed private investment in refining.

Breaking Pemex’s monopoly in refining “will most likely require a constitutional amendment,” board member Fluvio Ruiz said today in a phone interview from Mexico City.

Pemex won’t be privatized, according to document published on the president’s website.

The accord, which outlines goals for the relationship between Pena Nieto’s government and Congress for the coming years, also said a new mining law will be created and that royalties will be reviewed. About 100 members of the different parties attended the signing at Chapultepec Castle yesterday.

 – Bloomberg