The left of center Democratic Revolutionary Party (Partido de la Revolucion Democratica – PRD) announced today that it will disclose its proposal for reform of Mexican energy laws on Wednesday, July 30, 2008, according to today’s El Financiero.  The PRD proposal will likely be grounded in preserving Mexico’s ownership of oil and gas resources and keeping all of the profits derived from such resources within state oil monopoly Pemex.  Unlike the competing proposal of the Institutional Revolutionary Party (Partido Revolucionario Institucional – PRI), which I discussed in a July 23, 2008 post and which also gives Mexico full ownership of Mexico’s mineral resources, the PRD plan will probably disallow foreign investment in Mexican oil and gas exploration. That would be a mistake, particularly since Pemex is ill-equipped, both financially and technologically, to develop Mexico’s remaining reserves.

Pemex said yesterday in a Bloomberg report that it may drill for for oil outside of Mexico (for the first time in history) if Mexico’s Congress does not approve Pemex’s hiring of foreign partners for Mexican offshore projects.  The laws prohibiting Pemex from entering into partnerships with foreign investors do not apply outside of Mexico.  Pemex does not have the technology to drill in water deeper than 500 meters (1,640 feet), a meager depth by current standards.  According to the Bloomberg article, Pemex has received an offer from Brazil’s state-controlled oil company Petrolero Brasileiro, SA to explore the El Perdido Foldbelt of the Gulf of Mexico and Pemex jointly owns the Shell Deer Park refinery near Deer Park, Texas with Royal Dutch Shell Plc.