Mexico City (Platts)--28Mar2008

Mexican President Felipe Calderon's efforts at energy reform came under
heavyweight fire Friday from leaders of the party whose support is needed to
ensure passage through Congress.

Signs were growing, too, that the proposal, when it finally emerges, will
be relatively modest in scope.

Calderon is dragging his feet on the issue and allowing opponents to
reform to set his agenda, Emilio Gamboa, leader of the Institutional
Revolutionary Party (PRI) in Mexico's lower house, the Chamber of Deputies,
said in a radio interview. In an earlier statement, the PRI's Senate leader,
Manlio Fabio Beltrones, said Calderon was "rudderless."

Any proposal to allow production-sharing contracts in deep waters was
a non-starter, he added.

Under Mexico's three-party system, Calderon's pro-business National
Action Party (PAN) lacks a Congressional majority. The number two political
force, the leftwing Party of the Democratic Revolution (PRD), has refused so
far to debate what it believes will be a proposal to privatize the state oil
monopoly, Pemex. Calderon thus needs PRI support for his initiative.

But Gamboa said: "I haven't a clue what's going to be proposed. Obviously
the PRI should have been consulted, but the president hasn't even contacted
us."

According to the most recent estimates, the proposal will be presented to
the Senate next week. But that will leave little time for debate, Gamboa said.

"There's talk that they'll be looking for some sort of fast-track
approval," he told his radio interviewer. "But that's not on. This will be the
most important piece of legislation presented by this government. It will need
thorough debate."

HARSH WORDS FOR CALDERON'S FOE

The current session is slated to finish at the end of next month, though
an extraordinary session could be called. But any delay in the energy debate
could lead to an overlap with early campaigns for next-year's key mid-term
elections.

Beltrones, the PRI's Senate leader, also had harsh words for Andres
Manuel Lopez Obrador, the leftwing firebrand who was only narrowly beaten for
the presidency by Calderon. Beltrones criticized "those who think that
smashing the government and paralyzing the country are the way forward."

Lopez Obrador, whose once-waning political career has been re-energized
by the fight against oil sector reform, has called at mass rallies and for
civil resistance to reform. He wants "civic brigades" to physically halt
attempts to introduce a reform bill to Congress and has called on PRD
legislators to block all efforts at debate.

The increasingly confrontational political scene was referred to on
Thursday by PAN Senator Juan Bueno. The political climate was "too hot" for a
deep reform, Bueno told a radio interviewer, ading that proposals for
deepwater alliances between Pemex and foreign companies would have to be
shelved for the moment.

Bueno, who was chief executive of Pemex's refining subsidiary in the
prior Fox administration and currently is a member of the Senate Energy
Commission, predicted that Calderon's reform would involve refining,
distribution and petrochemicals, but that upstream changes would be modest.

--Ron Buchanan, newsdesk@platts.com