On November 13, 2024, the Secretary of Energy, Luz Elena González, presented the National Strategy for the Hydrocarbons and Natural Gas Sector for 2024-2030 (the "Strategy"). The Strategy follows the publication of the constitutional amendment in strategic sectors, which, among other things, returns Petróleos Mexicanos ("PEMEX") to its nature as a public entity. It outlines the objectives and actions that the Federal Government plans for 2024-2030, aiming to continue to enforce the Nation’s sovereignty and address the challenges faced by PEMEX, aiming to enhance the production and efficiency of hydrocarbons and their derivatives, while ensuring energy security and sustainability.
The key elements of the Strategy include:
I. Actions to be carried out within the 180 days following its presentation:
a. As a consequence of the constitutional amendment, PEMEX became a public entity and the Federal Government will resume the planning over the hydrocarbons sector.
b. PEMEX will have a vertical and horizontal integration of subsidiaries, intending to reduce affiliates for greater efficiency. PEMEX will initiate an austerity plan by the integration into a single company, a single PEMEX, aiming to save 50 billion pesos through: (i) eliminating redundant expenses and compacting costs; (ii) increasing productivity; (iii) reducing subsidiary companies; and (iv) increasing operational efficiency.
c. Mixed projects will be worked on, maintaining energy sovereignty in the following areas: (i) hydrocarbon production; (ii) strengthening the petrochemical industry; (iii) fertilizer production and (iv) new energy projects, such as solar, wind, geothermal, and green hydrogen.
This will be done concurrently with the efforts of the Federal Electricity Commission, and private participation will be allowed.
II. Strengthening Planning in the Hydrocarbons Sector:
a. In oil production, national consumption will continue to take priority over exports.
b. Exploration will maintain a reserve/production ratio of at least 10 years.
c. National petrochemical production will be increased through mixed projects that guarantee PEMEX ownership and by reactivating existing petrochemical complexes,with a production of up to 40,000 barrels per day of fuels and 330,000 tons annually of aromatics to supply inputs for the national industry.
d. Regarding fertilizers for agriculture, the production of ammonia and carbon dioxide will be increased to reach 2.2 million tons annually, as well as up to 1.6 million tons of urea by 2030.
e. Oil refining will be consolidated to achieve national self-sufficiency in gasoline and diesel.
f. A regulatory framework for biofuels and clean fuels will be developed.
g. Storage policy will be strengthened.
h. The operational efficiency of PEMEX will be strengthened.
III. Energy Justice and Pricing Policy:
Increases in gasoline,diesel, and natural gas prices will continue to be made below inflation. The same will apply to transportation and distribution tariffs for gas.
Projects will include social work with communities and public consultation; local development will be promoted.
IV. New Fiscal Regime for PEMEX:
a. Presently, (i) an Exploration Duty, (ii) a Hydrocarbon Extraction Duty, and (iii) a Shared Profit Duty apply. The Federal Government has yet to introduce the bill with the applicable law to be approved by Congress, with the purpose of simplifying this tax regime to make taxation easier and to capture the productive and operational efficiencies that PEMEX may have, by creating a single tax, the “Petroleum Duty for the Common Good”.
The new Petroleum Duty for the Common Good is determined based on a single rate of 30% for oil and 11.63% for non-associated gas, as provided below:
Price per unit (MME)(P) x Volume Produced (Q) x Single Rate
b. PEMEX's financial debt commitments will be addressed by the Mexican Government acting jointly with SENER and PEMEX, without need to resort directly to the markets.
V. Operational Objectives:
a. Exploration. The projection of 3P (possible) reserves is of up to 20.3 billion barrels of crude oil by 2030, using new exploration techniques in shallow waters and on shore fields to maintain 1P (proven) and 3P(possible) reserves. The plan is to restore and increase reserves for 10 years of consumption.
b. Liquid Hydrocarbon Production. It is expected to: (i) maintain the platform at 1.8 million barrels per day; (ii) prioritize strategic fields such as Zama and Trion; and (iii) promote mixed projects that allow increases in reserves and production.
c. Natural Gas Production. It is expected to: (i) increase gas production to 5 billion cubic feet per day; (ii) reduce gas flaring through the construction and modernization of infrastructure; (iii) maximize gas recovery and utilization in the Ixachi, Quesqui, and Casquete Cantarell fields, as wellas to develop marine fields; and (iv) reduce fugitive methane emissions.
d. Refining. It is expected to: (i) operate the projects located in Tula and Salina Cruz; (ii) increase the production of gasoline,diesel, and jet fuel; (iii) carry out major maintenance in the National Refining System; and (iv) consolidate the Gasolineras del Bienestar system.
e. Logistics. It is expected to: (i) increase the storage capacity for petroleum products; (ii) continue combating fuel theft and the illicit fuel market; and (iii) strengthen coordination between production and logistics to minimize transportation costs.
Because the Strategy is a conceptual document, to understand the details of its implementation it will be necessary to await for the bills with the secondary laws.
For any questions or comments, please do not hesitate to contact our expert team.
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