MOSCOW (MRC) -- Mexico's president has proposed an ambitious overhaul of Mexico's energy industry that would change the constitution to offer private companies profit-sharing contracts, according to Upstreamonline.
However, investors said the proposal might be too cautious, prompting a selloff of some Mexican assets, Reuters reported.
President Enrique Pena Nieto's proposal calls for changes to key constitutional rules that make oil and gas exploitation the sole preserve of the state. The changes are aimed at attracting new investment to stem sliding oil output.
If enacted, the reform would mark the largest private sector opening in decades for Mexico's oil and gas industry, which was nationalised in 1938 and is controlled by state monopoly Pemex.
The proposals will be sent to Congress this week and they are expected to pass because the government has backed away from more aggressive reform that would have faced bitter opposition from the left.
The government would also offer permits in association with Pemex to refine, transport and store hydrocarbons and petrochemicals.
Under the proposal, the state would also retain control of electricity transmission and distribution currently controlled by state monopoly CFE, while strengthening electricity regulator CRE and the energy ministry. But it would further open electricity generation to more private investment.
The reform would ease the financial burden on Pemex, lessening the amount it props up the government and using the leftover money to reinvest in the company, or to be paid out as a dividend for the government to invest in public spending.
Pena Nieto said the reforms would allow Mexico to boost oil output to 3 million bpd by 2018 and to 3.5 million bpd by 2025.
As MRC reported earlier, in early 2013, Mexichem announced that Pemex's Management Board authorized the co-investment between Pemex Petroquimica and Mexichem, seeking to bring viability and generate value in the country's VCM chain.
Pemex, Mexican Petroleum, is a Mexican state-owned petroleum company. Pemex has a total asset worth of USD415.75 billion, and is the world"s second largest non-publicly listed company by total market value, and Latin America's second largest enterprise by annual revenue as of 2009. Company produces such polymers, as polyethylene (PE), polypropylene (PP), polystyrene (PS).