Mexico has taken the first step towards ending its 75-year state monopoly on oil production and allow private investment.
The country’s president, Enrique Pena Nieto, has submitted a bill to the Mexican congress that would see Pemex being split into two separate units, and allow private companies to pump oil from the country for the first time since 1938.
The move, which means a change to Mexico’s constitution, is aimed at improving oil production in the Latin American country after output dropped by almost a million barrels a day in less than a decade.
Read Penelope Warne’s take on the Mexican oil and gas revolution here
A host of private companies have already expressed interest in the proposed changes, which would give access to huge reserves of previously untapped oil.
Pemex’s oil sales contribute around a third of Mexico’s revenue, with a further 13billion barrels as yet in reserve, but much of those resources are in hard areas to access.
The constitutional changes would offer profit-sharing contracts to foreign companies, although left-wing politicians in Mexico have objected to the privatization of state-owned oil.
“Mexico opted for profit-sharing contracts instead of concessions because the government considers that’s best for the nation’s interests,” said Mexico energy minister Pedro Joaquin Coldwell.