The Mexican Senate Tuesday approved the first comprehensive oil and gas reform legislation in 75 years, voting to allow foreign investors to take part in Mexico’s $95 billion-a-year oil industry.

The ruling PRI party and the opposition PAN voted to pass the reform despite opposition from the leftist PRD party.

The senate building was protected by security forces during the debate and vote.

Many Mexicans are suspicious about the reform and believe the state oil company, Pemex, is a corrupt institution that should be cleaned up before any laws are changed.

Opposition senators hung a banner in the legislative hall that said “No to Pemex Privatization.”

Under the 1938 constitution, Pemex was given a monopoly over the oil and gas industry, and foreign capital was banned.

Mexico crude production has fallen to less than 2.5 million barrels per day.

The country’s production peaked in 2004 at of 3.4 million barrels per day.

After President Enrique Peña Nieto said he’d introduce reform legislation to revive the country’s production, there were widespread protests.

In September, an estimated 45,000 people jammed Mexico City to oppose the reform.

The Senate vote Tuesday was 95 in favor and 28 against. The lower house, controlled by the RRI and PAN parties with nearly a two-thirds majority, is expected to approve the reform in the next few days.

It will allow profit sharing contracts, production sharing contracts, and licenses for production rights.

The profit sharing contracts will permit cash payments to foreign oil companies. Production sharing contractors will be allocated crude supply. And license holders will pay a royalty and production tax to a trust fund administered by Mexico’s Central Bank. Not all commercial details have been worked out yet.

“Exxon Mobil Corp., Chevron Corp., Brazil’s Petrobras, Spain’s Repsol and U.K.’s Petrofac, among others, have shown strong interest on returning to Mexico.

“Mexican billionaire Carlos Slim Helú is expected to take advantage of the oil opening since he is already involved in the energy sector with presence not only in Mexico but also in Colombia, Argentina and the U.S.,” Forbes said.


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