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MEXICO CITY, Aug 6 (Reuters) - Mexican lawmakers on Wednesday gave final approval to an overhaul of the state-run energy sector aimed at luring billions of dollars in new investments by foreign and private oil companies.
The senate approved a series of laws this week aimed at attracting companies such as Royal Dutch Shell Plc and Exxon Mobil Corp, and help stem declining crude production in Latin America’s No. 2 economy.
President Enrique Pena Nieto said on Wednesday he would sign the set of bills into law next week, paving the way for private companies to announce their plans to tap resources in the world’s 10th biggest oil producer.
The legislation fleshes out a constitutional overhaul approved last year that ended the 75-year monopoly of state-owned oil company Pemex and opens up oil, gas and electricity markets to private companies.
Pena Nieto broke through gridlock in a divided Congress to pass energy, telecommunications and banking legislation that aims to lift Mexico out of decades of sluggish growth in the country’s most significant reform push since the NAFTA trade deal with the United States and Canada in the 1990s.
Senators approved on Wednesday a final bill that amends public finance laws. The government finances around one-third of its budget with oil revenues.
“Today concludes a period of valuable, profound and transformative structural reforms that consolidate and strengthen Mexico’s foundations,” said Senator Manuel Cavazos from Pena Nieto’s Institutional Revolutionary Party (PRI).
The center-right National Action Party helped pass the legislation that was opposed by leftist lawmakers who claimed foreign companies would siphon off Mexico’s oil wealth for themselves. President Lazaro Cardenas nationalized the oil industry in 1938, making Pemex a source of national pride.
Officials expect the reforms will eventually spur enough economic growth to help curb the government’s dependence on taxing Pemex, which has seen output fall by more than a quarter from a peak in 2004 as heavy taxes cut into its ability to invest.
The legislation gives the government flexibility on setting the commercial terms for exploration and drilling contacts and private firms will be able to count reserves as their own, a key provision sought by publicly-traded companies.
Analysts project the reforms could spur tens of billions of dollars per year in investments and companies could soon begin to announce plans to build pipelines and electricity plants, but establishing oil and gas drilling projects may take years.
Mexican entrepreneurs could also rush in. Petrochemicals maker Alfa and billionaire Carlos Slim’s conglomerate Grupo Carso could expand oil-related units.
Pemex asked to keep over 80 percent of its proven and probable oil reserves and the Energy Ministry has until mid-September to determine which fields the company will keep.
Once the ministry has made is decision, Pemex could move quickly to announce joint ventures with global oil majors but it is expected to take into the second half of next year before the government auctions its first exploration and production contracts to private companies. (Reporting by Michael O‘Boyle, David Alire Garcia and Noe Torres; Editing by Muralikumar Anantharaman)