Passage of a bill in the Mexican Senate was hailed this week by oil industry analysts and goes much further in the effort to attract outside investment to Mexico than a proposal originally introduced in August by President Enrique Peña Nieto’s centrist Institutional Revolutionary Party, or PRI. Peña Nieto praised the more vigorous measure Wednesday.

If it indeed attracts private industry that can help Mexico — the world’s ninth-largest oil producer — do a better job of extracting its reserves, the impact could be significant, adding to the boom in shale oil and gas production in the United States and Canada of recent years, and further redrawing the lines of energy production and consumption that tend to define geopolitical realities.

“The Russians and the Middle East are watching this very closely,” said Dallas Parker, a Houston-based partner at Mayer Brown, a law firm that advises big energy companies. “Their stranglehold [on the oil and gas market] is at serious risk here.”

The Senate approved the legislation minutes before midnight Tuesday on a 95-28 vote, after nine hours of debate. To become law, it must also be approved by Congress‘ lower chamber and a majority of state legislatures. Though it is expected to clear those hurdles, it is already generating passionate protest from the Mexican left, which sees the move as a sellout of one of Mexico’s most precious natural resources.

On Wednesday, members of the Democratic Revolution Party, or PRD, and other leftists closed off the lower house, the Chamber of Deputies, in Mexico City, chaining doors and blocking entrances with chairs in an effort to prevent lawmakers from considering the bill.

“They are selling the entire subsoil of the country to interests that are against Mexico,” former PRD presidential candidate Cuauhtemoc Cardenas said in a TV interview. Leftist leaders hope they can stop the legislation by calling a national plebiscite, though it is unclear whether they will be able to pursue that avenue legally.

The bill’s supporters are hoping it will attract foreign companies to Mexico that can help Pemex, the bloated state-run oil monopoly, reverse its declining production. Two gigantic shallow-water oil wells are running dry, and experts say the country needs outside expertise and investment to extract oil from more technically demanding deep-water wells and shale deposits.

To that end, the legislation would alter the constitution to allow private oil companies to drill for oil and take a cut of the crude produced, as opposed to simply sharing the profits in such ventures, as Peña Nieto’s party originally proposed in August.

Such “production sharing” arrangements are important to big oil companies because they often own their own refineries, and tend to prefer the simplicity of taking oil directly from the wellhead to the refinery. The legislation also mentions that “licenses” could be granted to foreign companies. That could portend even greater freedom for private enterprise, although how these licenses would be defined is a matter likely to be worked out in subsequent legislation.

The bill would also remove the corrupt oil workers union from Pemex’s board of directors, substantially limiting the union’s historically enormous power, and open the electricity sector to private investment.

Rodrigo Aguilera, an analyst for the Economist Intelligence Unit, said the Peña Nieto government was wise to get behind a more vigorous reform law and abandon the less ambitious version it had introduced. The Mexican economy has hardly grown since Peña Nieto took office a year ago, a potentially major problem for a candidate who promised to focus on the economy.

The government expects the economy to grow by 1.3% in 2013. This week, the president of the Confederation of Industrial Chambers, Francisco Funtanet Mange, said the opening of the oil industry could boost economic growth to 3.7% in the short term, an opinion shared by a number of other experts.

Under the original plan, Aguilera said, it was not clear that foreign companies would have invested much at all. Not getting behind the new bill, he said, “would have been too big of a missed opportunity” for Peña Nieto.

On Wednesday , the president tweeted that the bill “will allow the energy sector to boost the industrial and regional development of the country, for Mexicans’ benefit,” and added that energy resources and oil revenue will “remain the property of all Mexicans.”

Although the Mexican people’s ownership of subsoil oil and gas will remain enshrined in the constitution, the left argues — and will no doubt continue to argue, loudly — that Peña Nieto has given away the store to foreign interests.

The topic is a sensitive one in Mexico. The oil industry here was nationalized in 1938 with great fanfare after what were perceived as exploitative practices by British and U.S. companies. Since then, the idea of relaxing the ban on foreign ownership has mostly been a nonstarter, considered unpatriotic at best.

The previous Mexican president, Felipe Calderon, of the conservative National Action Party, or PAN, also promised a radical overhaul of Pemex, but the reform that eventually passed on his watch, in 2008, ended up only modestly changing the status quo.

PRD leaders and other leftist politicians have argued that Pemex’s performance can be improved by modernizing the company and cleaning up its acknowledged corruption, not opening it to foreign interests. This week, the party promised a “new strategy” that would result in voters having a chance to reject the changes in a July 2015 plebiscite.

But whether the law would permit such a vote is unclear, and Peña Nieto’s allies have argued that a plebiscite could not affect the legislation because it has to do with matters of “revenue and expenditure.” Pemex currently supplies about a third of the federal government’s income.

In a poll released in June, 65% of Mexicans said they opposed opening Pemex to additional private investment. For now, angry public protests are likely to continue.

So will skepticism that Peña Nieto’s PRI party can bring about change that will benefit Mexicans, and not just party leaders, given its history of condoning, and benefiting from, corruption when it ruled Mexico for much of the last century.

Columnist Carlos Puig wrote in the newspaper Milenio this week that he opposed the changes because Mexico has historically been unable to adequately regulate other industries, from telecommunications to public transportation:

“If we can’t [regulate] a few taxis,” he wrote, “how are we going to do it with Exxon, or Shell, or BP?”

Researcher Cecilia Sanchez of The Times’ Mexico City bureau contributed to this report.

And now, apparently, so has the country’s main Roman Catholic seminary.

In a sermon Sunday, Cardinal Norberto Rivera Carrera announced that a vice rector at the Conciliar Seminary of Mexico received a number of threatening phone calls Nov. 20-21. The callers, the cardinal said, demanded 60,000 pesos — about $4,500 — “in exchange for respecting the lives of the superiors of that institution,” according to a statement issued Sunday evening by the Archdiocese of Mexico.

“Last week we were meeting in the seminary; they called numerous times, and identified themselves as La Familia Michoacana,” Rivera said, according to the news service Milenio, referring to a drug cartel based in Michoacan state. “But who knows?”

The allegation will register as less than shocking to many here, and not only because extortion calls are so common. Mexicans are also inured to the fact that the Catholic Church generally receives little immunity from the depredations of Mexico’s wave of organized crime.

That reality was driven home in May 1993 when Cardinal Juan Jesus Posadas Ocampo was shot to death in the parking lot of the Guadalajara airport. Federal investigators concluded that hit men for the Tijuana cartel mistook the cardinal’s car for that of one owned by Sinaloa cartel leader Joaquin “El Chapo” Guzman, although many Mexicans never bought the explanation.

More recently, a number of priests and church officials have been subject to violence and threats. Last month, two priests were gunned down in an apparent robbery attempt at a parish residence in Veracruz state. In October, Miguel Patiño, the bishop of Apatzingan, a city in troubled Michoacan, released an open letter denouncing the power of drug gangs there and reportedly received death threats after speaking out.

In July, the bishop of Cuernavaca state said a priest in the area had been a victim of extortion, and had also received threats of violence.

Though top Catholic leaders have denounced the culture of violence here, some parishes have benefited from drug world largesse, accepting donations from capos to finance church renovations and community projects.

Cardinal Rivera, according to the archdiocese, instructed the rector of the Mexico City seminary to report the threatening phone calls to officials. In his sermon, according to the statement, he “lamented the spiral of violence that has been growing in the country.”

Photo: Cardinal Norberto Rivera Carrera, above in October 1998, announced Sunday that a vice rector at the Conciliar Seminary of Mexico received threatening phone calls. Rivera has instructed the seminary to report the calls to authorities. (Corrado Giambalvo / Associated Press, via LA Times)

But in the short term, by many measures, his country remains a mess.

Though he promised to focus on Mexico’s economic potential, Peña Nieto has presided over an economy that has hardly grown at all. Though he vowed to reduce the kind of violence that affects innocent citizens, his record has been mixed, with kidnappings and extortion rising nationwide even as the number of homicides drops.

And the drug war rages on. In recent months, the key agricultural state of Michoacan has devolved into something close to a failed state, as armed peasants have formed ad hoc militias to protect themselves from the surging cartel menace. On Wednesday, the president’s finance minister, Luis Videgaray, declared that the ongoing chaos there was a threat to Mexico.

As Peña Nieto marks his first year in office, he has successfully pushed major banking, education, tax and telecommunication reform bills through Congress, and is pursuing changes in the crucial oil industry. Yet the young, confident and telegenic president, who as a candidate promised a “government that delivers,” is facing doubts about his ability to do just that.

A poll from El Universal newspaper last month put Peña Nieto’s approval at 50% and his disapproval at 37% — his worst numbers so far as president. In the newspaper Excelsior, columnist Leo Zuckermann last week noted that the president had failed to transform the positive story he tells about Mexico into actual good news.

“It was one thing to ‘sell’ great expectations, which the Peña government did very well,” Zuckermann wrote, “and another very different thing to deliver good results.”

On Sunday, thousands of the president’s critics marched in the historic center of Mexico City to protest his first year in office, and the idea of opening the state oil monopoly to foreign investment.

Some protesters threw rocks at a storefront and at the headquarters of Televisa, the giant TV network that many consider to be biased in Peña Nieto’s favor. Seven protesters were reportedly arrested.

The government expects the Mexican economy to grow by an anemic 1.3% this year, which many analysts blame largely on a troubled world economy.

The president, meanwhile, is asking his fellow Mexicans to give his big-picture agenda time to generate results.

“I am sure that the foundations that we are achieving will be very firm and solid, and will allow Mexico to have more economic growth and more social development,” Peña Nieto said at an October business summit in Guadalajara. “I’m convinced of it.”

While the president’s initiatives have included some ideas that could be considered liberal, including tax hikes and an anti-hunger program, others have sought to address the market distortions that linger from the last century, when his Institutional Revolutionary Party, or PRI, ruled Mexico with a dollop of socialism and a heap of corruption.

It may be a challenge, however, to convince Mexicans that a radical transformation is truly underway. This is a country with a history of passing beautifully constructed laws that often end up doing little to change the real-life status quo. Some critics argue that Peña Nieto and his allies have allowed key elements of their reform package to be watered down and made less effective as they compromised, trying to mollify often raucous special interest groups and opposition political parties who had agreed to a general reform framework in a so-called Pact for Mexico, signed just after Peña Nieto’s inauguration.

The education law, for example, has been criticized for not being tough enough on chronically underperforming educators: Teachers can be reassigned, but not fired, for repeatedly failing new evaluation tests. The law was passed over the fierce objections of a radical union whose protests choked Mexico City for weeks.

The tax proposal, meanwhile, sought to boost revenue in a country that has the lowest tax collection rates in the developed world. Though the law that eventually passed included some tax increases, a proposed sales tax on food and medicine was left out in an effort to placate the left.

Peña Nieto has yet to push through the most controversial change of all: a plan to open the bloated and inefficient state oil monopoly, Pemex, to foreign investment. The company supplies a third of the federal government’s income, but production is dwindling precipitously, and analysts say Pemex requires injections of foreign expertise and technology to turn itself around. But the constitution mandates that oil is the property of the Mexican people, and the issue touches deep chords of national pride.

Peña Nieto’s team has backed a proposal to share profits with foreign oil concerns, but not the cut of the petroleum itself that those companies would prefer.

The legislature could vote on the proposal by year’s end. Jorge Castañeda, a well-known intellectual, is among those who believe that the president and his team should get behind a production-sharing plan, or something like it, in hopes of delivering Mexico a dramatic economic boost.

“They know they have to do something more, that just profit-sharing is not going to do the job,” Castañeda said. “But they may or may not have the political capital left at this stage to do more. If they had done energy reform at the beginning, maybe it would have been easier.”

Meanwhile the left-wing Democratic Revolution Party, which opposes such measures, pulled out of the much-ballyhooed Pact for Mexico in protest.

On the crime front, federal figures show that homicides for the first 10 months of 2013 were down 16% compared with the same period in 2012, but extortion was up 10% and kidnappings up 33%. Such numbers come with multiple caveats: Prominent critics have charged that the government is manipulating the homicide statistics, while the extortion and kidnapping figures could reflect an increase in the reporting of crimes to authorities.

Peña Nieto has struggled in his efforts to resolve the conflict with the drug cartels that has left thousands of people dead and come to define the country in the eyes of the world. The president had hoped to lower his reliance on the military, which was sent into the streets by his predecessor to push back against the cartels. Yet when trouble escalated in Michoacan, Peña Nieto appeared to have little choice but to send in the troops.

As a candidate, Peña Nieto promised to create a paramilitary police force known as the “gendarmerie” to do some of the work the military is doing now. But its rollout has been delayed, and officials have changed their statements about its mission and makeup. “The gendarmerie,” says Mexican security expert Alejandro Hope, “is a joke.”

Last week, the international group Human Rights Watch sent an open letter to Peña Nieto accusing him of having a human rights strategy that was “largely confined to rhetoric” while lacking “a concrete plan” for combating violence.

In an interview, Sen. Ana Lilia Herrera of the PRI repeated the administration’s contention that there had been a fundamental change in security strategy, one that stressed better “coordination” among government officials.

Such is the rhetoric. Mexicans are waiting to see if it produces results.

richard.fausset@latimes.com

But in recent days, Mexicans have seen the depth of the challenge facing the men and women charged with running the 2,438 municipios, roughly the equivalent of U.S. counties, that are supposed to be a building block of governance here.

The mayor of Santa Ana Maya, a rural municipality in Michoacan state, was killed this month after complaining that cartel members were regularly demanding a chunk of the federal money meant for public works projects in his area, a practice he said was widespread.

Now it seems the drug lords may not be the only ones demanding their cut.

Several lawmakers and heads of local governance associations recently have begun accusing legislators in the Mexican Congress of also regularly shaking down municipal governments, demanding that they kick back “tithes” of at least 10% if they want infrastructure projects included in federal budget plans. Sometimes the lawmakers allegedly demand that projects be built by specific companies that are run by their cronies.

Though no proof of the practice has emerged, the allegations have plunged Mexico City, the capital, into full scandal mode, with investigations demanded and lawsuits threatened. Former allies have turned on one another.

An anonymous legislator last week singled out the conservative party’s leader in the lower chamber, Luis Alberto Villarreal, accusing him of taking a 10% cut of projects last year worth about $45 million.

Villarreal has denied the charge and has made threats of legal action, presumably against his accuser if he or she is ever identified.

Some powerful members of Villarreal’s National Action Party, meanwhile, are among those clamoring for an investigation, and have asked Villarreal to step down in the meantime. Others are hoping the matter will be discussed by a proposed new anti-corruption commission, an idea introduced by President Enrique Peña Nieto that has yet to be approved by Congress.

Corruption in Mexican government is a well-known fact of life, and many mayors are presumed to be crooked as well. But some observers are incensed by the notion that federal officials may have been sapping the strength of local governments at a time when they needed to be stronger than ever to face the threats posed by drug gangs.

Eduardo R. Huchim, a columnist for the newspaper Reforma, wrote this week that the federal government had forgotten that municipalities, “being the authority closest to society” needed strengthening.

“It hasn’t been that way,” he wrote, “and they’ve practically been left to their own devices.”

The heightened drug violence in recent years has made it risky business to be a mayor, with 44 killed during the last seven years, according to Ricardo Baptista, director of the Assn. of Local Authorities of Mexico.

Many mayors have been too afraid to speak out about the alleged extortion from legislators and have turned instead to local governance associations like Baptista’s to make the issues public.

“Some are at risk of losing their lives, and others are at risk of going to jail for entering into these [corrupt] practices,” Baptista said Wednesday after a tribute to the slain mayor, Ygnacio Lopez Mendoza, outside the Mexican Senate.

Just as bad, Baptista said, is that residents lose faith in the government.

Federico Estevez, a political scientist at the Autonomous Technological Institute of Mexico, said the long-term solution may be to lift the prohibition on mayors and legislators running for second terms. That, he said, would force them to make their case to voters that they had managed public funds responsibly.

Estevez was unusual in seeing a positive side to the scandal. In the less democratic Mexico of the recent past, he said, the alleged illicit payments sought by officials might never have come to light.

Cecilia Sanchez of The Times’ Mexico City bureau contributed to this report.

On Tuesday, after serving three years behind bars, he was released from a Mexican detention center and was on his way to the United States — where he would soon live as a free man.

Or, rather, a free boy.

The killer, Edgar Jimenez Lugo, known to Mexican crime reporters as “El Ponchis,” is 17 years old. He was 11 when he killed his first victim, and he was 14 when he was arrested, in December 2010, at the Cuernavaca airport, along with luggage containing two handguns and packets of cocaine.

Back then, Jimenez’s tender age transformed him into a media phenomenon, one that shocked Mexico, and the world, into recognizing the extent to which the country’s brutal drug war was consuming its young. And now it is one of the reasons why Jimenez — who claims to have killed four people at an age before most kids get their learner’s permit to drive — will soon be mingling with the residents of San Antonio.

Under the laws at the time in the Mexican state of Morelos, where he was prosecuted, Jimenez could be sentenced to a maximum of only three years of incarceration because he was a minor. A judge ordered him released Tuesday, a few days before his three years were up.

And because he is a U.S. citizen, born in San Diego, he has every right to return to his home country.

“Apparently he’s paid his debt for whatever crimes he was convicted of [in Mexico], and I’m not aware of any charges the U.S., federal or state, has against him,” Michelle Lee, an FBI special agent based in San Antonio, said Tuesday. “The situation with him is really no different than any other U.S. national who commits a crime, completes their sentence and is released.”

Jimenez, who had lived, and killed, in Jiutepec, a town near the popular resort city of Cuernavaca, was on a plane headed to San Antonio, where he has family, Jorge Vicente Messeguer Guillen, the Morelos government secretary, said in a TV interview.

Once in San Antonio, Messeguer said, Jimenez would be sent to what he referred to as a “support center” but would not be locked up.

Graco Ramirez, the Morelos governor, said in a separate TV interview that Jimenez’s rehabilitation in the Mexican penal system had been “notable.” He also said that Jimenez had to leave Mexico because his life might be in danger.

U.S. State Department officials would not elaborate on what Jimenez’s living arrangements would be when he arrived in Texas. Nor did they clarify what Messeguer meant by a “support center.”

“We are aware of Edgar Lugo’s upcoming release by the Mexican authorities following completion of his sentence,” a spokesman for the U.S. Embassy in Mexico City said in a statement Tuesday. “We are closely coordinating with our Mexican counterparts and appropriate authorities in the United States regarding Edgar Lugo’s release.

“Due to privacy considerations, we do not publicly discuss details of matters involving U.S. citizens,” he said.

Jimenez’s case is far from unique. In February, a 13-year-old boy was arrested in the state of Zacatecas along with a group of gunmen. The boy, identified as Armando, confessed to participating in at least 10 slayings. He was freed because the state criminal code does not prosecute minors younger than 14. A month later, the boy and his mother were found slain along with four other people.

In 2011, a 15-year-old who went by the name Erick was arrested and said he worked for the same group that Jimenez did, participating with other teenagers in kidnappings and drug dealing. He was sentenced to two years and eight months in prison.

Similar cases have come to light in the states of Jalisco, Tabasco and Veracruz, but probably represent only a small fraction of the total: Studies by the National Autonomous University of Mexico have estimated that a million youths are at risk of being recruited by the cartels.

Jimenez’s release is likely to rekindle the debate about the justice system’s treatment of minors who commit serious crimes. In 2005, the Mexican Constitution mandated the creation of separate justice systems at the state and federal levels for offenders younger than 18.

More recently, there has been a push to take a harsher stance, exacerbated in part by the drug cartels’ habit of drawing from the country’s vast pool of poverty-stricken, poorly educated children to form their ranks.

In March, Morelos lawmakers increased the maximum sanction for children who commit serious crimes so that a suspect like Jimenez would serve five years, not three, behind bars, a change that came about as a result of his case. In July, the state of Veracruz went further, raising the maximum penalty for 14- to 16-year-olds from four years to 10 years of incarceration, with 16- to 18-year-olds now facing the possibility of 15 years.

Such changes have concerned some children’s rights groups, but the clamor is not likely to die down. Javier Lozano, a senator with the conservative National Action Party, or PAN, sent a series of Twitter messages on Tuesday asking Mexicans to consider lowering the minimum age for trying children as adults.

“The liberation of ‘Ponchis’ speaks of a perverse system in which under the pretext of being a minor, one can be an assassin, but not a criminal,” he wrote.

After his arrest, Jimenez claimed that he had killed at the behest of a man who was a suspected cartel enforcer who threatened to kill the boy if he did not follow orders. He said that his employer, the Beltran Leyva cartel, paid him $200 a week, and that he was stoned on marijuana when he committed the crimes.

He was, in many ways, a perfect drug-war recruit: destitute and from a broken family. In the 1990s, child welfare officials removed Jimenez and five siblings from their parents’ custody in San Diego. In a 2010 interview with The Times, Edgar’s father, David Jimenez, said that he and his wife had been known to fight violently.

Edgar’s grandmother was appointed legal guardian and brought the children to Mexico. But she died in 2004, and Edgar dropped out of school in the third grade.

“I’m not defending him,” Messeguer said. “But … his circumstances caused him to be a victim as well.”

richard.fausset@latimes.com

Fausset is a Times staff writer. Sanchez is a news assistant in The Times’ Mexico City bureau. Times staff writer Molly Hennessy-Fiske in Houston contributed to this report.