The Mexican Congress passed sweeping reforms Wednesday that will open up the country’s oil and gas industry to private investment.
The reforms end the 75 year monopoly held by Mexico’s state-owned Pemex and was the center piece of President Enrique Peña Nieto’s agenda.
The legislation is meant to revive the country’s flagging energy industry and make it more competitive globally and in the Gulf of Mexico.
Pemex’s production fell by 1 million bpd over the last decade from 3.5 million bpd to 2.5 million bpd.
According to the US Energy Information Association estimates, the Gulf of Mexico has proved reserves of 4.872 billion barrels of oil, 163 million barrels of condensate and 425 millions barrels of liquid natural gas.
Lawmakers also hope opening the energy markets will lower prices and bring in billions of investment dollars.
The new laws allow foreign and private domestic companies to explore, produce and refine oil and gas.
Foreign and private domestic companies will operate under contract with the Mexican government and compete against Pemex.
The new framework allows companies to enter production-sharing contracts and licenses and file reserves as expected income.
Prior to the reforms, private companies could only work under service contracts with Pemex.
The first round of tenders for joint-ventures at fields assigned to Pemex are expected later this year, the Wall Street Journal said.
Bidding for new areas is slated to open June 2015 and is expected to happen yearly.
Currently, Mexico exports about 1 million bpd but is a net importer of all other petroleum products including LNG, gasoline and natural gas.
The country posted a $551 million petroleum deficit with the US during the first three months of 2014, according the Bank of Mexico.