MEXICO Trends and Developments Contributed by: Carlos de Maria y Campos, Francisco Fernández Cueto, Antonio Borja and Eduardo García Travesi, Galicia Abogados
• approves private projects only if aligned with the planning. This makes regulatory alignment a prerequisite for investment.
• Mixed Entitlements ( Asignaciones para Desarrollo Mixto ) – If PEMEX determines that it requires tech- nical or financial support to carry out the develop- ment of certain blocks, it may invite private part- ners. These partnerships are governed by Mixed Contracts, which are subject to the following rules. (a) PEMEX is not required to contribute capital but retains at least 40% of the participating inter- est – and therefore a proportional share of the profits. (b) Cost recovery is capped at 30–40%. These terms are widely considered unattractive by many investors, as they offer limited upside, making it more challenging to structure competitive bids or bankable projects. Exceptionally, E&P agreements If PEMEX does not reach an agreement with potential partners – as is expected considering the above-men- tioned restrictions – the Ministry of Energy (SENER) may, on an exceptional basis, award Exploration & Production (E&P) agreements to hold the rights to exploit a hydrocarbon block, as determined by SEN- ER, through competitive bidding processes. These may include licence, production-sharing, profit-shar- ing or services agreements. The “crude” reality • PEMEX is facing severe financial constraints, which limit its ability to develop new fields with its own resources. PEMEX must first service its heavy debt, address labour contingencies and pay suppliers. Without support of third parties (operators/inves- tors), PEMEX will struggle to maintain expected production. • Under these circumstances, the most likely path for the Mexican government to boost oil production is to award E&P contracts to private oil companies, leveraging their financial strength and technical capabilities. This combination of factors creates a potentially attractive opportunity for new partici- pants in the upstream business. • To ensure success, the new contract models will need to offer fair, transparent and bankable terms.
Hydrocarbons Sector context
The 2013–14 opening of the oil and gas industry end- ed poorly under former President López Obrador. • PEMEX accumulated a record level of debt, con- sidered the largest of any national oil company in the world. • Suppliers faced chronic delays in payments. • Oil production fell to historic lows. • Illegal trade of hydrocarbons and liquid fuels became widespread. • Storage and transportation infrastructure proved insufficient. • Investment collapsed. In this context, new reforms were needed to reactivate a vital oil and gas industry for the Mexican econo- my. Under the new constitutional framework – which grants PEMEX a competitive advantage over private investors – the new rules are expected to strengthen PEMEX’s position and foster partnerships with private investors to increase oil production. They also aim to boost investment in the sector’s infrastructure and curb the illegal practices, such as contraband and fuel theft, that have long harmed both market participants and consumers. Upstream New legal framework • A new Hydrocarbons Sector Law (LSH) was issued in March 2025, followed by regulations in October 2025. • The new framework gives PEMEX preferential access to new fields and places it at the centre of
upstream development. Entitlements for PEMEX
• State Entitlements ( Asignaciones para Desarrollo Propio ) – PEMEX has first rights to develop new oil fields.
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