Mexico Approves Watered-Down Oil Industry Reform

Mexico's Congress has passed a watered-down energy industry reform that enables private contractors to participate in the state-owned oil business but won't likely draw enough investment to reverse declining production in the third-largest oil supplier to the United States.

By AP
Published: October 29, 2008

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MEXICO CITY (AP) - Mexico's Congress has passed a watered-down energy industry reform that enables private contractors to participate in the state-owned oil business but won't likely draw enough investment to reverse declining production in the third-largest oil supplier to the United States.

The reform allows deep-water exploration only on a straight contractual basis, instead of paying private companies based on the amount of oil they find. Private investment in the building and operating of oil refineries also was ruled out under pressure from leftist lawmakers.

Mexico's lower house voted 326 to 133 Tuesday to approve the version passed by the Senate last week.

Mexican oil production has dropped 10 percent this year to an average of 2.8 million barrels a day.