Mexico moves forward with energy reform to strengthen dominant roles of state companies

Adds vote count, background on energy sector

By Adriana Barrera

MEXICO CITY, Feb 26 (Reuters) - Mexico's Senate approved on Wednesday the laws of an energy reform that strengthens the dominant role of state companies Pemex and CFE while opening new doors for private investment to reach the country's self-sufficiency goals.

The new laws- which had 85 votes in favor, 39 against and one abstention- will now be sent to the lower house of Congress where it is expected to get final approval.

If passed, highly indebted Pemex would get more freedom and preferable conditions to work with private companies in a range of investment schemes while retaining control of projects.

In addition to service contracts, Pemex will be able to migrate to what it has referred to as mixed schemes and exploration and extraction. As part of these, it will retain the right to the area and not provide capital.

It can work with private companies in a framework similar to that of the so-called farmouts set out in the energy reform of 2013.

Former President Andres Manuel Lopez Obrador had harshly criticized the farmout structure.

Pemex will no longer have to go through a bidding process overseen by an independent regulator to migrate existing agreements to mixed participation contracts.

Reuters reported in August that President Claudia Sheinbaum would once again seek associations with private companies.

In electricity, the reform also establishes a priority dispatch into the grid by CFE and mandates that it produces at least 54% of the electricity that is generated in Mexico.

The remainder would be generated with the help of private companies in partnerships with CFE where the state company holds a majority; in Mexico, private companies generate electricity from renewable sources.

The reform also establishes that the electrical system must operate under conditions of reliability and continuity, and must promote the energy transition to renewable energy sources.

It contrasts the approach of Lopez Obrador, who promoted the use of fossil fuels.