Mexican President Opens State Oil Company Pemex To Foreign Investment - Denies Privatization

Petróleos Mexicanos, known as Pemex, the state-owned oil company, has been largely restricted to foreign investment--now, that prohibition is going to be repealed.

Mexican President Enrique Peña Nieto said he is willing to break the state monopoly in oil and gas exploration and production and has been sending signals to international oil companies to accelerate the county's economic growth.

"It's obvious that Pemex doesn't have the financial capacity to be in every single front of energy generation", Peña Nieto said in an interview in London on June 17. His administration will send the energy bill to Congress by September, hoping it will be approved with the help of the alliance of the country's top three political parties.

During a speech at London's Chatham House of Petróleos Mexicanos addressed his plans for the company. "We are not in the process of privatizing Pemex", he assured. "But we need to expand its capabilities. Pemex needs more resources. If we want affordable gas, better production levels, we need to open up to private participations through methods that have been tested in other countries."

Pemex is the world's seventh-largest crude producer, with annual sales of more than $100 billion, and is currently the only company allowed to explore and extract oil. Some analysts say the company needs to boost annual investment by almost half and some kind of reform, or México could become an importer in the coming years.

Peña Nieto's political opponents have spoken. The former head of the Party of Democratic Revolution (PRD), Jesús Zambrano, argued that nothing has been said about a constitutional reform and asked the President to clarify his plans. Andrés Manuel López Obrador, the leftist presidential candidate who lost to Peña Nieto, said he's against changing the constitution.

México's Secretary of Energy, Pedro Joaquín Codwell, said that "not a single screw (of Pemex) will be sold". Codwell explained that the government's goal is to potentiate and increase the state's oil revenues and that under no circumstances is considered privatization.

A new poll by the Centro de Investigación y Docencia Económicas (CIDE), a research institute, says that 65 out of every 100 Mexicans are against opening up Pemex to foreign investors.

According to The Wall Street Journal, companies Exxon Mobil and Royal Dutch Shell are reportedly ready to invest in México if Congress passes the measure.