Mexico’s Senate has finally approved new sanctions, officially paving the way for international oil companies to operate in its energy sector.
The move will be the first time in more than 70 years private oil contracts can be awarded in the country.
The vote came three months after the initial decision deadline was declared. The final tally totalled up to 78 votes in favour of the change and 26 votes against.
The constitutional overhaul marks an end to Petroleos Mexicanos’ exclusive rights to crude production, which it has enjoyed since 1938.
“There isn’t the slightest doubt that this is a reform of utmost importance for the country,” Emilio Gamboa, senate leader of Pena Nieto’s ruling Institutional Revolutionary Party, or PRI, said after the vote.
“We are entering a new phase, one where Pemex is going to compete, that opens to new markets and competition.”
It’s hoped opening up its exploration market to outside influences will see a reversal of historic declining output. It’s also thought the decision will see an influx of up to $50billion of private annual investment by 2020.
The country’s Energy Ministry is now expected to announce which exploration fields Pemex will retain under a phase known as ‘Round Zero’. The announcement is expected to come sometime next month.
“Round Zero is what everybody is going to be looking at next,” Duncan Wood, director of the Mexico Institute at the Woodrow Wilson International Center for Scholars in Washington, said.
“That’s of crucial importance for determining the future for Pemex.”