November 30, 2010 / 5:21 PM / 8 years ago

Mexico Supreme Court to hear Pemex law challenge

 * Pemex wants to offer private companies contracts
 * Lower house in Oct 2009 voted to challenge regulations
 MEXICO CITY, Nov 30 (Reuters) - Mexico’s Supreme Court on Tuesday will hear a challenge to regulations that would allow the state oil monopoly Pemex to sign contracts with private companies, as some lawmakers try to block a bid to open up the sector.
 “They are discussing it, it’s in today’s order,” a court spokeswoman told Reuters on Tuesday.
 Legislation passed by Congress in late 2008 opened the door to Pemex hiring private companies as contractors in hopes of reversing Mexico’s slumping oil output. But the lower house voted in October 2009 to challenge the regulations implementing the law, claiming the government overstepped its authority.
 Pemex [PEMX.UL] said last week it plans to offer the three contracts, which would turn over mature oil fields to private operators. The company hopes private firms will help it modernize production and boost crude output from the older fields by up to 150,000 barrels per day.
 The contracts do not grant private companies ownership over the oil and gas they produce. But they do represent a significant break with Mexico’s long-held reluctance to allow international oil companies to operate in the country.
 Mexico, the world’s No. 7 oil producer, relies on crude oil exports to fund around a third of the federal budget, but years of underinvestment in exploration have left it with few options to quickly replace production capacity lost at its aging oil fields such as the super-giant Cantarell complex.
 International oil giants like Exxon Mobil Corp (XOM.N), BP Plc (BP.L) and Repsol (REP.MC) have been eyeing Mexico closely, although some analysts believe smaller firms may be more interested in the first round due to the small size of the fields on offer.  (Reporting by Adriana Barrera; Editing by David Gregorio)   

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