Mexico’s bill that ends a 75-year state oil monopoly will be sent to President Enrique Pena Nieto for enactment after a majority of states ratified the proposal.
San Luis Potosi, Puebla and Yucatan were among states that approved the legislation over the weekend, bringing the number of those that have endorsed the plan to 17 of 31. Mexico’s most significant economic overhaul since the North American Free Trade Agreement was enacted in 1994 had been approved by Congress on Dec. 12.
The bill ends the monopoly held by Petroleos Mexicanos, or Pemex, and will allow companies such as Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX) to develop the largest unexplored crude area after the Arctic Circle. The changes could bring an additional $20 billion in foreign direct investment and strengthen the peso, according to Carlos Capistran, chief Mexico economist at Bank of America Corp.
The passage of the energy overhaul is credit positive, Moody’s Investors Service senior credit officer Mauro Leos said in an interview Dec. 13. It could boost potential economic growth by half a percentage point, JPMorgan Chase & Co. said in a Nov. 28 report.
The yield on fixed-rate peso bonds maturing in 2024 fell three basis points, or 0.03 percentage point, to 6.34 percent at 8:45 a.m. in Mexico City. The peso fell 0.2 percent to 12.9113 per dollar.