Amending the law that has been stopping foreign oil companies to produce oil in the country, Mexico is trying to open its oil market. The 75-year-old monopoly held by state-owned oil-firm Petroleos Mexicanos will soon be over as the foreign investment will begin pouring in. The house representatives voted 354-134 in favor of the bill.
Thus, ratifying the changes approved late Tuesday by the Senate, the amended bill will help foreign oil companies invest in the country, which has traditionally been monopolized by the state run oil company. According to the local media the bill ends the restrictive laws that have kept private companies out of oil-and-gas production.
Competitive Oil Sector in Mexico
Till now private entities that worked for Pemex as contractor were allowed. Nonetheless, the changes once implemented will allow the government to partner with private firms through different kinds of contracts, including licenses. The measure is aimed to help the country bring competency and increase production.
According to the government, the country would shift from an energy market currently run by a single player, state-firm Pemex. Now, the country will be able to have a competitive oil market wherein private companies will be playing a vital role. In fact, private oil-and-gas firms will be allowed to explore and produce hydrocarbons on their own; however, they will still be under contract with the government.
Liberalization of Oil Sector
The much awaited liberalization of oil sector in Mexico came to execution when the president Pena Nieto, who took office a year ago, pushed for a revamp of nationalistic energy laws to boost the country’s oil-and-gas output. The tremendous changes in the economic policies of the country are expected in the next year.
The ruling Institutional Revolutionary Party and the right-wing National Action Party backed the changes. Earlier, any such moves were opposed by the left and liberal parties that are now sitting in opposition. The bill, however, still needs to be passed by a majority of the country’s state legislatures.
However, the observers believe that passing the bill would not be a problem as the ruling party has a majority and have even been supported by some other right wing parties. In fact, the Mexican president Nieto could be signing the bill into law in late January or early February and that will be the beginning of a new era in the oil sector.
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