By Adriana Gomez Licon
MEXICO CITY -- A Mexico senate committee proposed Saturday to open the country's beleaguered, state-run oil sector to greater private investment.
The Senate proposal would allow the government to grant contracts for exploration and extraction of oil and gas to multinational giants such as Exxon (XOM) or Chevron (CVX), something that is currently prohibited under Mexico's constitution.
According to a draft obtained by The Associated Press, the proposal also would allow private contractors to "book reserves," or list oil reserves in their financial statements. It goes much further than the plan introduced by President Enrique Pena Nieto in August, which only allowed profit-sharing agreements but not arrangements for sharing oil.
The measures in the Senate proposal have been prohibited in the decades since 1938, when then-President Lazaro Cardenas nationalized the oil industry, a symbol that for decades that has been fiercely protected by the constitution from possible profiteering by foreign companies.
The Senate proposal would change three articles of constitution, while Pena Nieto had only proposed to change two.
The proposal still specifies that oil in the ground is the property of the Mexican state. But it also says that the changes will allow direct foreign investment "up to 100 percent in exploration and extraction activities." The constitution would continue to prohibit oil concessions, considered the most liberal kind of access by private oil companies.
The proposal was hashed out by Pena Nieto's ruling Institutional Revolutionary Party, or PRI, with the conservative opposition, the National Action Party, which wants an oil reform as open as possible to all kinds of investment and partnership possibilities.