Plan to overhaul Mexico's nationalized oil industry stirs protest

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As riot police surrounded the Mexican Senate offices to hold back protesters, lawmakers on Thursday passed a controversial overhaul of the nation's flagging oil industry — the third-largest supplier to the United States

MEXICO CITY — As riot police surrounded the Mexican Senate offices to hold back protesters, lawmakers on Thursday passed a controversial overhaul of the nation's flagging oil industry — the third-largest supplier to the United States.

The bill — which now goes to the lower house, where prospects for passage are good — would allow more private and foreign investment in the state-run oil monopoly Petróleos Mexicanos, or Pemex, to help boost production.

The measure, watered down from changes proposed by conservative President Felipe Calderón, has drawn criticism from analysts who say it may be too limited to do Mexico much good in tapping new petroleum deposits to bolster a shaky economy. Leftist critics, meanwhile, worry that it would open the door to privatizing a state industry, long seen by many Mexicans as a source of national pride.

The protest was led by leftist firebrand Andrés Manuel López Obrador, who lost to Calderón in a disputed presidential election in 2006 and who opposes any effort to privatize Pemex. The final version was backed by Calderón's National Action Party, the once-ruling Institutional Revolutionary Party and senators from López Obrador's Democratic Revolution Party.

Mexico nationalized the oil industry in 1938 out of anger over what it saw as exploitation by American and other foreign firms, and it has long treated Pemex as a central part of its identity. Foreign and private firms are barred from investing directly in Pemex.