Mexico edges toward letting foreign oil firms invest in Pemex

Bruce Bullock, director of the Maguire Energy Institute at SMU's Cox School of Business, talks about Mexico's moves toward warming up to investment by foreign oil firms.

By Tracy Wilkinson and Shan Li, Los Angeles Times

MEXICO CITY — Mexico's ruling party has taken a step toward opening its state oil company to outsiders, a move that could eventually allow U.S. oil firms to drill south of the border.
In an important test of Mexican President Enrique Peña Nieto's sway over resistant factions of his party, the Institutional Revolutionary Party has changed its bylaws to clear the way for changes at Petroleos Mexicanos, or Pemex.
Pemex, a symbol of nationalist pride, is the top source of tax revenue for the Mexican government. But its production of oil has been declining dramatically and the company is in dire need of outside expertise for deep-sea exploration.

On Sunday, PRI, as the party is known, passed several changes that Peña Nieto needed for the reforms he promised as a hallmark of his administration. Chief and most difficult among them is opening the behemoth Pemex to private and foreign investment, long a taboo in this country....

If the reforms pass, U.S. oil companies are well positioned to both refine and consume the oil produced, said Bruce Bullock, executive director of Southern Methodist University's Maguire Energy Institute. In the long run, he said, such partnerships could help smooth big gyrations in gas prices.
"The more oil we can get out of friendly places like Canada and Mexico, and the less oil we can get out of places like Venezuela and the Middle East, certainly the less volatile oil prices will be," he said....