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On March 18, 2025, a series of legal reforms related to the hydrocarbons sector were published in the Federal Official Gazette through the enactment of the Hydrocarbons Sector Law (“LSH”), the Law of the National Energy Commission (“CNE Law”), and the Law on State-Owned Enterprises, Petróleos Mexicanos (“PEMEX Law”). These reforms also amend the Mexican Petroleum Fund Law for Stabilization and Development, the Federal Public Administration Law, and the Hydrocarbons Revenue Law.
These changes significantly reshape the governance of Petróleos Mexicanos (“PEMEX”), which is now defined as a State-Owned Enterprise with a vertically integrated structure. PEMEX's activities are no longer considered monopolistic, and the creation of value is no longer its primary objective—social development now takes precedence.
The reform also addresses the granting of permits, regulation of allocations and contracts, and the fiscal regime applicable to the industry. This transition to a new regulatory framework marks the beginning of a period of adjustment, with potential impacts on private investment, sector competitiveness, and legal certainty for companies operating in the market.
In this context, it is essential to assess how these changes will affect the dynamics of the sector and what legal strategies companies may adopt to mitigate risks and seize opportunities under the new regulatory environment.
One of the most significant structural changes is the creation of the National Energy Commission (CNE), a decentralized body under the Ministry of Energy (SENER) that will assume the functions currently performed by the Energy Regulatory Commission (CRE). The CNE will have technical, operational, management, and decision-making autonomy.
This restructuring seeks to consolidate regulation under a single authority with broad powers over the granting of permits, infrastructure oversight, and price and tariff regulation in the energy market. The CNE will be led by a Director General appointed by the President of Mexico and ratified by the Senate, except for the first appointment, which does not require Senate confirmation.
The CNE will be supported by a Technical Committee responsible for authorizing permits and issuing regulations, composed of SENER officials and energy sector experts. Among other responsibilities, this committee will oversee the approval, modification, update, revocation, and termination of permits and authorizations, as well as the regulation of compensations, prices, and tariffs within the hydrocarbons sector.
SENER will also assume the functions currently carried out by the National Hydrocarbons Commission (CNH).
The creation of the CNE centralizes the regulatory framework for permits, contracts, and market oversight in a single body. While this could streamline public policy implementation, it also raises concerns about the concentration of power in an entity under SENER’s authority.
For private companies and investors, the reform requires an adaptation of compliance strategies and early alignment with new authorization criteria. The transition of CRE and CNH functions to CNE and SENER, respectively, may result in administrative delays and increased scrutiny in permitting processes, potentially affecting ongoing projects and new investments.
Another core aspect of the reform is the redefinition of PEMEX’s role. It is no longer a “Productive State Enterprise” but now a State-Owned Enterprise, granting it greater operational flexibility.
These changes seek to strengthen PEMEX’s position in the energy market by providing it with tools to compete with greater flexibility against private players and foreign state-owned companies. However, for investors and private operators, this transformation introduces uncertainty regarding transparency in decision-making and competitive balance within the industry.
As an example of the above, PEMEX may directly award certain integrated service contracts or carry out specific exploration and extraction activities with private companies without prior public tender. This may raise concerns among investors regarding fairness in the allocation of contracts and competition in the sector.
The elimination of certain restrictions on procurement and budgeting could also result in less external oversight, thereby increasing risks in the management of resources and projects.
The redesign of the allocation and contracting framework is another key component. Traditionally, the regulatory model allowed private participation through production-sharing, profit-sharing, and license contracts, while PEMEX received direct allocations.
This new framework means that private sector participation will depend more heavily on partnerships with PEMEX or competitive public tenders, often in direct competition with PEMEX. While a state-backed partner may reduce certain investment risks, the structure also limits private autonomy in project development.
The fiscal component introduces a new tax structure, the “Petroleum Duty for Welfare,” designed to increase public revenue from hydrocarbons activities.
These taxes apply to the value of extracted products. The goal is to capture a larger share of the economic rent from natural resource exploitation. However, for operators, this represents a cost and profitability challenge. In a global environment where tax competitiveness is key to attracting investment, this increase may jeopardize new projects or ongoing developments.
Additionally, importers of hydrocarbons will bear joint tax liability for other regulated activities related to import and transportation.
Mexico’s hydrocarbons sector reform marks a significant shift with profound implications for the market. Regulatory reconfiguration, the strengthening of PEMEX, and the new tax regime create both challenges and opportunities for businesses and investors.
The entry into force of secondary legislation on March 19, 2025 initiates a regulatory transition period that requires proactive planning from all stakeholders. Notably, proceedings before CRE and CNH will be suspended for 90 calendar days, making early planning essential for ongoing projects.
Companies currently engaged in unregulated activities—such as off-pipeline petrochemical transportation or petroleum product formulation—should monitor the issuance of relevant regulations closely and be prepared to apply for new permits under the updated legal framework.
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