President Enrique Pena Nieto has proposed reforms that will encourage foreign and domestic investment in the industry.
Mexico's oil industry is dominated by the state oil firm Pemex, but it needs investment and expertise to develop new oil and gas fields.
Currently, private companies can be awarded service contracts within the oil industry.
If the reforms go through, analysts say the liberalisation of the oil sector could double foreign investment in Mexico, giving the economy the biggest boost since the country joined North American Free Trade Agreement (NAFTA) twenty years ago.
BBC Correspondent in Mexico, Will Grant said: "The reform won't be simple to get through congress.
"The government faces a complicated task in negotiating with all sides, including the powerful unions.
"Yet, there is a growing sense among ordinary Mexicans that Pemex is no longer fit for purpose, is an aging and out-dated institution and that root and branch reform is probably needed," he said.
A large share of Pemex's profits support government spending which has hampered the company's ability to fund new projects.
The government has warned that Mexico faces becoming a net oil importer as early as 2018, if major new oil projects cannot be developed.
Foreign oil companies, including BP and Exxon Mobil, are waiting to see the details of the reforms to see exactly what investments will be allowed.
According to figures from OPEC, Mexico is the world's 10th-biggest producer of crude. Production has fallen by 25% since hitting a peak of 3.4m barrels per day in 2004.
Source BBC
