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Energy: Pemex on track for liberalization

Mexico is expected to take the first crucial steps towards improving its oil sector and liberalizing aspects of state-owned Pemex’s management. An energy reform proposal was sent to the Mexican congress on April 9 by president Felipe Calderón, and will be voted on shortly. Analysts are confident that the bill will be passed and, despite one opposition party, PRD, claiming this is "back door privatization", key players of the other opposition party, the PRI, support the reform.

The reform does not touch on the constitution so only a simple majority is required for the bill to pass but this also means that privatization is ruled out. However, there are still high hopes that the legislation will inject new life into Pemex’s flagging oil production. In the first quarter of 2008, oil production fell 7.8%, year on year. "These reforms are eight years overdue – Pemex is sorely in need of change or Mexico will become a net importer of oil," says Walter Molano, head of research at BCP Securities. "Some think this reform is too light to really bring about the changes Pemex needs." Pemex’s chief executive, Jesus Reyes Heroles, said at the World Economic Forum meeting in Cancún.

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