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Mexico set to reform oil sector

Mexico City - The country's senate has given general approval to controversial legislation to open the state-controlled energy sector to foreign investment and break a 75-year-old monopoly.

The bill is the centre piece of President Enrique Pena Nieto's sweeping reform drive, which has led to new laws in tax collection, telecommunications and education in an effort to revitalise Latin America's second biggest economy.

The legislation would let private firms explore and extract oil and gas as well as share profits, production and risks with state-run energy giant Pemex, ending a ban cemented in the constitution.

Oil production

The bill proposes contract and licensing schemes that fall short of more controversial concessions.

The proposed constitutional changes stem from a deal between Pena Nieto's centrist Institutional Revolutionary Party (PRI) and the conservative opposition National Action Party (PAN).

The two parties say the reform is badly needed to modernise Pemex and reverse falling oil production.

The PRI insists the oil would remain in the nation's hands. It says the reform is needed to reverse a downward trend in oil production, which has dropped from 3.4 million barrels per day in 2004 to 2.5 million bpd today.

 

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