Mexican President Enrique Peña Nieto has unveiled a plan to permit some limited participation by other oil companies in the country, marking the first time in 75 years that state-owned Pemex won’t be the only game in town.
Mexico’s oil industry has been nationalized since 1938. The country is the third largest supplier of oil to the US and has the world’s fourth largest reserves of shale gas, according to Forbes.
The reform may revolutionize the energy sector in Mexico and open the door to oil giants such as Exxon, BP, Shell and Chevron.
Nieto’s proposal must receive congressional approval but is moderate enough that it’s likely to pass. It won’t give foreign oil companies outright ownership of oil fields but will give them payment for oil they find and produce, reports Forbes.
Nieto made it clear that Pemex will not be sold or privatized and that his plan is meant to garner private investment to stimulate the country’s energy sector. Pemex funds about 30 percent of Mexico’s national budget and is a source of pride for many Mexicans, according to the Washington Post.
Although Mexicans see Pemex as “drenched in corruption,” according to the Washington Post, at the same time, Mexicans consider their oil reserves a national treasure not to enrich foreign companies.
Some criticized Nieto’s proposal because it doesn’t address the endemic problem of corruption within Pemex. The Forbes article suggests Nieto cannot address the problem of corruption because too many members of his own party, PRI, participate in the graft.