By Staff Reporter (staff@latinospost.com) | First Posted: Jul 19, 2013 05:15 PM EDT

Mexico's opposition conservative party will present its own bill to open up the state-run oil sector to private investment.

According to conservative National Action Party (PAN) lawmaker, Ruben Camarillo, Mexico needs to open up exploration, production and refining to private companies.

"Cosmetic reforms won't go anywhere. We are going to present a very audacious reform," Camarillo told Reuters in an interview. "Private-sector participation in all oil processes should not be prohibited as it is now." PAN has spent years pushing for a shake-up of state oil firm Pemex.

This statement puts pressure on the government, which President Enrique Pena Nieto has already pledged to allow more private capital in the state-run oil business to revive flagging oil output. But he has yet to present his own legislation and it is unclear how far his bill will go. Meanwhile, Camarillo anticipated that the PAN will probably be presenting their bill in August.

Mexico already allows private companies to partner with Pemex on a wide range of service contracts, but explicitly prohibits profit-sharing and production-sharing agreements. PAN's bill, as announced, will propose changes to the section of Article 27 in the constitution, which is a legal obstacle to granting third parties contracts or concessions to participate directly in the oil sector. Article 27 was included in the constitution by decision of president Lázaro Cárdenas in 1938, and establishes that oil is a public good, hence the prohibition to concede its exploration, production and refining to private companies. Controversial article 27 of the constitution is the most relevant for private investors, as says David Shields, analyst and investigator of oil subjects, in CNN Expansión.

The debate in the Mexican congress over what Energy Policies should be asumed by the State was started on July 13, 2008. That day, President Felipe Calderón sent to the Senate a proposal explaining that Pemex needed to work with private companies.

José Valera, analyst and consultant in oil subjects for Mayer Brown, says Mexico is unlike other countries like Colombia, Brazil or Norway, where their state oil firms associates with private companies for expensive and risky projects, like extraction of oil in deep waters. In this case, Pemex is one of the few state oil firms that goes alone into exploring deep waters.

Omar Palomino, a consultant for Everis, has said that the main candidates to partner with Pemex would be Shell, BP, Exxon and Chevron. Allegedly, they have already claimed to be willing to invest in Mexico.

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