Mexico national content debate risks turning off oil majors
By Gabriel Stargardter and David Alire Garcia
MEXICO CITY, April 1 (Reuters) - Mexico is considering rigid rules that would ensure a hefty cut of the spoils of a landmark energy overhaul go to Mexican firms, but that could jeopardize billions of dollars in investment from oil majors seen as key to future growth.
Late last year, Mexico's Congress approved a constitutional reform pushed by President Enrique Pena Nieto that ends state oil giant Pemex's 75-year monopoly, and aims to lure new investment into the sickly energy industry.
Secondary legislation that will flesh out the details of the reform are due any day, but one of the main sticking points has been the issue of local content purchasing rules.
Lawmakers are deciding whether to follow the example of Brazil, which opted for high levels when it liberalized its oil industry, or copy Norway and Colombia, which both rejected set percentages.
Pena Nieto says the energy reform could help drive economic growth to as much as 6 percent a year in Latin America's No.2 economy, which has long lagged regional peers.
A key aim of the overhaul is to attract oil majors to boost declining crude output, so policymakers must tread carefully or risk scaring off the same companies that have balked at Brazil's local content requirements.
"We are not in favor of prescriptive percentages," Alberto De La Fuente, Shell's top executive in Mexico, said at a recent energy forum in Mexico City.
The constitutional reform passed in December says the law should establish "minimum national content percentages" as a way to promote domestic supply chains, but gives no further detail. Continuación...