Oil debate stirs Mexico passions

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Mexico has marked the 70th anniversary of the nationalisation of its oil industry amid a fierce debate over the future of state oil monopoly Pemex.

President Felipe Calderon, addressing a ceremony celebrating the 1938 takeover, called for more private involvement to boost Pemex's declining production.

But later in the day, a protest march in Mexico City decried any role for the private sector in the oil industry.

Pemex's revenues constitute nearly 40% of the Mexican national budget.

Addressing oil workers in the Gulf coast state of Tabasco on Tuesday, President Calderon insisted that reform proposals did not amount to privatisation of Petroleos Mexicanos (Pemex).

"The question that we should be asking today is not whether our oil will continue to be ours. I have said it before, and I will reiterate again, this oil is and will continue to belong to all Mexicans," said Mr Calderon.

"The real question that we should be asking ourselves is how to take better advantage of our petroleum resources to bring prosperity to Mexico in the future."

Declining

Pemex's proven oil and gas reserves fell for the sixth consecutive year in 2007, Pemex officials said on Tuesday.

Mexico was the world's sixth biggest oil producer in 2006 but production has also been falling, particularly in its offshore field, Cantarell, that has yielded some 60% of the country's oil.

Passions run deep in any debate of Pemex and its future

Experts believe there is much more oil in the deep waters of the Gulf of Mexico but Pemex lacks the technology to expand its exploration sufficiently.

In his speech, Mr Calderon announced plans for a new refinery to reduce Mexico's dependence on imported petroleum products.

Outlining proposals to make Pemex more efficient and productive, Mr Calderon said the company should be able to count on the operational and technical support of specialised companies.

'Theft'

Mexico's constitution stipulates that the oil industry must remain in state hands and suggestions of allowing more private involvement have provoked a strong reaction among some Mexicans.

Leftist opposition leader and defeated presidential candidate Andres Manuel Lopez Obrador said opening the company up to outside investment would threaten national sovereignty.

"We can't permit any kind of foreign entities or economic interests to come before the nation of Mexico," he told a rally in Mexico City.

"The theft of the oil industry would leave open the risk of violent confrontation," Mr Lopez Obrador said, promising more protests against any proposed reform.