Mexico's Senate voted 90-28 on Wednesday (17.7.2014) to approve the core elements of a bill setting out the regulatory framework for opening the country's oil and gas sector to private investment, according to reports by Reuters and the leading Mexican daily El Universal.

Under the new Hydrocarbons Law, a centerpiece of President Enrique Pena Nieto's economic reform agenda, production and exploration for oil and gas by private companies will once again be permitted, after a 75-year hiatus. The government hopes that opening the hydrocarbons sector to private investment will reverse the past decade's pattern of falling oil and gas output.

The Hydrocarbons Law sets out the regulations under which state-owned Pemex oil and gas company can enter into exploration or production contracts with private or foreign oil and gas corporations.

The bill is not yet law. It now passes to the Chamber of Deputies, the lower house in Mexico's bicameral legislature, for further debate.

Hydrocarbons sector privatization controversial

The hydrocarbons sector had been state-owned and run by national oil company Pemex since 1938, when the Mexican government passed a law nationalizing all oil and gas companies, domestic and foreign, operating in Mexico.

"The energy model that we have followed for so many years has been exhausted," said legislator Ernesto Cordero, of the conservative National Action Party (PAN) before the vote. "We have to understand this, we need private participation" in the sector, he added.

Left-wing legislators strongly criticized the privatization bill during debates.

"This is not an energy reform, this is a clear dispossession of the country's oil," said Dolores Padierna, a senator of the leftist Party of the Democratic Revolution (PRD), the third largest party in Mexico's Congress.

Senators are also set to vote on three more energy bills in coming months, including one that would open up Mexico's electricity market to private companies.