Mexico left eyes new street fight over oil sector

MEXICO CITY (Reuters) - Mexican leftists, who paralyzed the capital with election protests in 2006, will go back to the streets this weekend to fight any attempt to let private capital into the oil sector.

But a top senator said Thursday the leftist Party of the Democratic Revolution is willing to hold talks in Congress about an energy reform sought by President Felipe Calderon, possibly blunting the impact of street protests.

Hundreds of thousands of people went on marches in 2006 to support losing presidential candidate Andres Manuel Lopez Obrador's claims that Calderon stole the election by fraud.

Now Lopez Obrador hopes to rally his supporters outside the headquarters of the Pemex state oil monopoly Sunday to protest at what he sees as plans to privatize the company.

But Sen. Graco Ramirez, the left's main voice on energy in the Senate upper house, said the debating chamber was still the best place to hammer out the future of Mexico's energy sector, which is grappling with declining output and reserves.

"We are up for the debate," said Ramirez, a secretary of the Senate energy committee which wants to agree a reform proposal backed by the three main political parties by April. He said his party would not boycott Congress energy debates to disrupt the reform, as sought by firebrand Lopez Obrador.

"We are not going on any parliamentary strike," he told Reuters in an interview.

"But we are going to act with a lot of firmness as a movement outside," Ramirez said, referring to street protests.

An energy law, which Calderon wants to pass before Congress goes into recess on April 30, could give Pemex more autonomy, improve transparency and allow private investment in refining and fuel transportation.

Calderon's party would also like it to permit strategic alliances in areas like deepwater oil drilling or in offshore fields that straddle the U.S. maritime border -- an idea the left firmly opposes.

Pemex says easing a ban on profit-sharing private partnerships could help shore up flagging output and reserves.

As long as it does not seek a change to the constitution, which gives Pemex the sole right to extract Mexican oil, the ruling National Action Party, or PAN, could achieve an energy reform with the sole support of the other main opposition, the Institutional Revolutionary Party. (Editing by Marguerita Choy)