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Pemex Warns of 40% Drop in Oil Output

Approval of reform proposal needed to prevent decrease, Mexican oil firm says.

The chief executive of Mexican oil firm Pemex said Tuesday the state-owned company's output would drop by up to 40% if a government reform proposal allowing for private investment was not approved.

"Of the 2.9 to 3 million barrels of crude which are produced daily, we would lose 1.2 million barrels in 2015 without the reform," Jesus Reyes said at the World Petroleum Congress, a major industry gathering, in Madrid.

Mexican President Felipe Calderon is trying to convince Congress to approve a plan which he unveiled in April that aims to reverse a decline in output by increasing private sector participation in the country's oil sector. The reform would give Pemex more leeway to contract with private service companies for exploration and production.

Calderon's conservative party does not hold a majority in Congress. To pass the reform he needs the votes of opposition parties that have rejected it in its current form, calling it a privatization.

Reyes said, "Pemex needs and desires the support of private national and foreign players to be a stronger, more efficent company and as a result we are committed to do everything possible to pass President Calderon's reforms in the coming months."

The government "is open to good proposals which can be made to improve the legislative proposal," he added.

Pemex, which posted a loss of $1.4 billion last year, plans on building two new refineries and will reduce gas imports if the reform is approved.

Copyright Agence France-Presse, 2008

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