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Mexico opens gas, oil to foreign, private firms

Published on NewsOK Modified: August 11, 2014 at 3:22 pm •  Published: August 11, 2014
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MEXICO CITY (AP) — President Enrique Pena Nieto signed into law on Monday new rules governing a historic opening of Mexico's state-run oil, gas and electricity industries to foreign and private companies.

Pena Nieto said the government will let potential investors know by Wednesday which blocks of gas and oil fields will be open for them. The state-owned oil company, Petroleos Mexicanos, or Pemex, has the right under the new rules to take first dibs and set aside some fields for itself. Pena Nieto said those set-asides will also be made public Wednesday.

The president also promised to start putting in place regulatory and oversight agencies to implement the new rules by the end of August.

Government control of the oil industry began with the 1938 nationalization of foreign oil companies, and it has long been a touchstone of Mexican nationalism. Energy Secretary Pedro Joaquin Coldwell acknowledged the new system has changed that.

"Today marks a watershed ... a change in the energy paradigm. It is a change in the way we relate our national identity to energy, to bring it up to date with realities of the 21st century," Coldwell said at the signing ceremony at Mexico's National Palace, where beloved late President Lazaro Cardenas announced the expropriation 76 years ago.

The realities include a constant decline in oil and gas production in recent years as Pemex proved unable to open up significant deep-water or shale-gas production, both areas where the government hopes private firms will bring in expertise and tens of billions in investment.

The overhaul opens up production- and profit-sharing contracts for private companies that had been restricted to operating just as subcontractors for Pemex, without the ability to book reserves or gain a significant share in profits.

With drilling companies busy around the world, the first partial openings in the late 2000s proved unattractive. It's unclear how much interest there will be in the new round of bidding, which is expected to open in early 2015.

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