Mexico Won't Open Energy Sector Soon, Amador Says

-- Mexican President Felipe Calderon won't have enough political support to push through changes that would allow foreign oil companies to drill for crude in Mexico before 2009, a lower house deputy from an opposition party said.

Congress is too politically divided for Calderon to win the two-thirds majority needed to change the constitution to allow for outside investment, said Alberto Amador Leal, a member of the energy commission and the Institutional Revolutionary Party, or PRI. The cooperation between Calderon's party and the PRI is too fragile for such an overhaul, he said.

Amador's comments highlight the difficulties Calderon faces trying to parlay his success passing laws limiting state pension liabilities and rewriting the tax code into support for opening up the energy sector to private investment. Mexico's constitution and laws say the government owns all oil resources.

``It would be very difficult to change the constitution within the current state of polarization,'' he said. ``We don't feel that there is reciprocity from the federal government, and the dialogue with the federal government is intermittent.''

The PRI has paid a political cost for supporting Calderon's tax overhaul legislation, he said.

Calderon's National Action Party, or PAN, holds the most seats in Congress. It's followed by the Party of the Democratic Revolution, or PRD, and the PRI.

Strategic Alliance

While legislators would probably block an attempt to change Mexico's constitution, Calderon may be able to win support for joint ventures that don't violate existing laws, Amador said. Possibilities include alliances with state-controlled companies such as Brazil's Petroleo Brasileiro SA and Norway's StatoilHydro ASA.

Calderon may be able to win backing for agreements that would allow the outside companies to provide technical assistance in drilling deep-water oil wells, without giving them rights to Mexican crude, Amador said.

``We think there are ways of doing it,'' he said.

Mexican Energy Minister Georgina Kessel said in March that Petroleos Mexicanos, Mexico's oil monopoly, needs to enter alliances with several companies to help it develop deep-water oil fields.

Pemex's oil production has declined steadily since 2004 as Cantarell, the world's largest offshore oil field, is depleted. Cantarell's oil output fell 12 percent in 2006 from the previous year and is forecast to drop 15 percent this year to an average of 1.53 million barrels a day.

Pemex has set a goal of maintaining oil production above 3.1 million barrels a day over the next five years. That's down from peak production of 3.38 million barrels per day in 2004.

So far, Calderon's administration hasn't outlined its strategy for Pemex to legislators, Amador said.

``The best way to confront such a complex problem is to show your hand,'' he said. ``It's going to be very difficult to discuss in pieces.''