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MEXICO CITY (AP) — Mexico's Senate debated the final pieces of legislation Wednesday needed to enact a dramatic expansion of the role of foreign and private companies in the state-run oil industry.
The Senate was expected to approve the final packages of laws to regulate private oil and gas drilling that is being allowed for the first time since the industry was nationalized 76 years ago. The overhaul is supported by the governing Institutional Revolutionary Party, the conservative National Action Party and a smaller party that together can form a majority.
Arguing against the legislation, leftist lawmakers brought a life-size picture of the late President Lazaro Cardenas on to the floor of the Senate to press their case that the governing party is betraying the beloved leader who expropriated foreign oil holdings in 1938. They contend the changes amount to the privatization of the oil industry, while saddling taxpayers with the legacy of past corruption and mismanagement at the state-owned oil company, Pemex.
Legislators earlier approved several laws implementing 2013 constitutional amendments meant to reverse declining oil production by spurring deep-sea and shale gas exploration with foreign expertise.
The new rules would also authorize private production of electricity.
The measures being debated Wednesday are among the most controversial parts of the energy overhaul, including a provision to transfer about one-third of the state oil company's enormous pension debts to the books of the federal government. The pension debt, including similar pension liabilities at the state electricity company, totals around $151 billion, which is equal to about 10 percent of Mexico's GDP.
Opposition senators said any graft, malfeasance or corruption in those pension accounts should be cleared up before taxpayers are saddled with the debt.
For decades, the Institutional Revolutionary Party, known as the PRI, ran Pemex and the country with little transparency or accountability. The party held the presidency from 1929 to 2000, and regained the office in 2012. The PRI has had a long and cozy relationship with the oil workers union, which has been implicated in multiple instances of corruption.
Mexican oil production peaked at about 3.4 million barrels a day in 2004, and it has fallen steadily since then, to about 2.5 million barrels a day.
Passage of the energy legislation would cap off President Enrique Pena Nieto's reform efforts, which have included rewriting telecommunications, education and election laws.
"Of all the reforms that have been done up to now, this is without doubt, the most important," said Carlos Capistrani, chief economist in Mexico for Bank of America Merrill Lynch. "It has the potential to transform Mexico."
The first calls for bids on new oil concessions and contacts are expected to be issued sometime in 2015.
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