The yesterday's Senate proposal would allow the government to grant contracts and licenses for exploration and extraction of oil and gas to multinational giants such as Exxon or Chevron, something that is currently prohibited under Mexico's constitution.
It also says that contracts could be made directly with the state, rather than issued by the state-run oil company, Petroleos Mexicanos, or Pemex, ending its monopoly on Mexican oil.
The proposal, which gets official committee consideration today, could allow contracts for profit- and production-sharing, as well as licenses, in which companies pay royalties and taxes to the Mexican government for the right to explore and drill.
It would give private companies the ability to post expected benefits in their financial statements, as long as they specify in their contracts that all oil and gas they find in the ground belongs to Mexico, according to articles expanding on the reform.
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The constitution would continue to prohibit oil concessions, considered the most liberal kind of access by private oil companies. The bill still must be approved by the two houses of Congress and 17 of Mexico's 31 states and federal district.
Opponents said the proposal outlines a system that has been proven a "total failure," while analysts consider it an unprecedented move in opening the door to the private investment Mexico needs to save its oil sector.
"This is a big breakthrough," said George Baker, publisher of the Houston-based newsletter, Mexico Energy Intelligence.
"This is a very big intellectual and policy leap ... Whether or not it's ultimately commercially attractive can't be decided at this point."
The leftist opposition Democratic Revolution Party, or PRD, renewed its call for a public referendum on the issue.
"They're trying to give the industry to foreigners," said Sen. Dolores Padierna. "The participation of private oil companies has been, if you look at it calmly, a total failure."