Mexican president Enrique Peña Nieto called again during a speech at London's Chatham House for Petróleos Mexicanos, the state-owned oil company better known as Pemex, to be opened to foreign investment as part of a push to improve its productivity. Pemex was appropriated from foreign owners over 70 years ago -- a nationalization codified by article 27 of the Mexican constitution -- and Peña Nieto has been angling for political support across Mexico's parties to allow foreign and private companies to tap some of the country's oil and gas reserves. But he has thus far declined to elaborate on details about whether or not it would involve a constitutional reform and what sorts of limits would be placed on how companies could profit from Mexico's natural resources.
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"We are not in the process of privatizing Pemex," Peña Nieto said in his speech. "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."
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The world's fifth-largest crude producer is currently the only company allowed to explore for and extract oil. It takes in about $110 billion in annual revenue -- about 40 percent of the Mexican government's budget. But the company says it needs to boost annual investment by almost half in order to tap undeveloped shale-gas deposits and deep-water reserves; oil output from the company has fallen over a quarter since hitting a peak of 3.4 million barrels per day in 2004. Some analysts say that without some kind of reform, Mexico could become an importer by 2018.
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In an interview with Business Week on Monday, he called it "obvious" that Pemex lacked the financial capacity to go on in "every single front of energy generation". He added, "Shale is one of the areas where there's room for private companies, but not the only one."
Peña Nieto says his administration will send a "transformational" reform bill to Congress by September, and hopes to work out a deal with the other two main parties, the Party of the Democratic Revolution (PRD) and National Action Party (PAN). Lawmakers from those parties have rejected the idea of amending the constitution.
Jesús Zambrano, the former head of the PRD, said earlier this week that the Pact for Mexico -- an agenda of priorities and needs agreed upon by the three major parties -- says nothing about an amendment and asked the president to clarify his plans. Andrés Manuel López Obrador, the leftist presidential candidate who lost to Peña Nieto, has said he's against changing the constitution. So is Miguel Ángel Mancera, an ally of López Obrador and current mayor of Mexico City.
Peña Nieto has called it "absolutely false" that the constitution must be amended before private investment can come into the oil sector.
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