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Oil report

Slow start to Mexico oil reform as board delayed

MEXICO CITY, Jan 13 (Reuters) - The implementation of Mexico’s 2008 energy reforms has gotten off to a slow start after the government failed to make key appointments at state oil company Pemex.

The legislation called for President Felipe Calderon to nominate four so-called professional directors to the Pemex board by the end of December but the government has so far not made any announcements.

“It is a bad signal that Calderon has not announced his proposals for the professional directors,” wrote Mexico City oil analyst David Shields in a local newspaper on Tuesday.

“The professional directors are not going to resolve all the problems at Pemex but they are a symbol of the oil reform.”

The professional directors are expected to help improve corporate governance and strategic planning at Pemex but the appointments have been delayed by negotiations between the ruling party and opposition lawmakers, according to Congressional aides and local media reports.

Late last year, Congress passed the energy reform package meant to help reverse the slide in oil production that threatens Mexico’s status as the world’s sixth-biggest oil producer.

In addition to overhauling the Pemex board, the reform gives the state company more autonomy over its budget and loosens some restrictions on the contracts it can offer to private sector firms.

But while Calderon has the right to name the professional directors, they must be confirmed in the Senate, where the ruling party lacks a majority. Opposition politicians appear to be using their control of the Senate to retain some influence over Pemex.

The ruling party is expected to allow the centrist PRI party and the leftist PRD party the right to name one professional director each, while the other two professional directors are expected to be loyal to the ruling conservative, an aide to a senior ruling party senator said.

“It looks more likely to happen in early February. Right now we are working on getting consensus,” the aide said.

OIL FIRMS CONCERNED

The delay in appointing the new board members is viewed by foreign oil companies as a bad sign for future progress.

“They should be moving faster on this issue. There is a huge amount of work ahead this year for Pemex, which is supposed to be completely restructured at the same time as dealing with its output problems,” said a foreign oil executive in Mexico City.

The reform legislation calls for a wholesale restructuring of Pemex as well as the creation of new governance committees, but this work cannot begin until the board members are selected. (Editing by Christian Wiessner)

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