Peña Nieto stresses need to modernize Pemex

Mexico City, Jun 8 (EFE).- Mexican President Enrique Peña Nieto reaffirmed his commitment to maintain Petroleos Mexicanos as a state-owned company, but also stressed the need to modernize and transform the world's No. 5 oil producer.

"If we want to meet and surpass the challenges of the 21st century, we can't continue operating with frameworks and methods from last century," the head of state said in a speech in the western city of Mazatlan.

Pemex employs some 160,000 people and the taxes it pays account for roughly 40 percent of Mexico's national budget.

The company "is and will continue to be the basic patrimony of all Mexicans. The nation will continue to exercise full sovereignty" over its hydrocarbon resources, he added.

That principle is enshrined in Mexico's constitution, although leftist politicians have warned that Peña Nieto's government plans to allow private companies to acquire a stake in Pemex, a possibility Mexican authorities have periodically denied.

"Pemex will not be sold or privatized," Peña Nieto said Friday.

But he said the state-owned company "needs to be strengthened and modernized" to face the challenges of a modern world and "continue to be the engine of the country's development."

To that end, he said the company needed to improve "its model of efficiency, transparency and accountability," as well as "free up its potential in terms of investment and innovation."

"If we mobilize and transform Pemex, we'll mobilize and transform Mexico," the president added.

Pemex, the world's fifth-leading oil producer, has a monopoly on the production of hydrocarbons (crude and natural gas) and refined products in Mexico.

A recent oil sector overhaul, however, gave the oil monopoly - created when the country's oil industry was nationalized in 1938 - more freedom to undertake projects with private firms, which are hired under incentive-based service contracts.

Though production has recently stabilized and the country said last year it had achieved a reserve-replacement ratio of 100 percent, Mexico's output has suffered from the natural decline of the once-super giant Cantarell offshore field and a lack of sufficient investment.

In addition to exploring deep-water areas in the Gulf of Mexico, Pemex also is looking to boost energy production by assessing its non-conventional reserves.