New Regulations in the Mexican Energy Sector
On October 4, 2023, Mexico’s energy sector underwent comprehensive regulation with the publication of six new regulations governing hydrocarbon industry activities. These regulations, published in the Official Gazette of the Federation, include the Laws on Hydrocarbons, Geothermal Energy, Electric Sector, Biofuels, and Energy Planning and Transition. Additionally, existing provisions in the Hydrocarbon Income Tax Law were reformed and repealed.
Delayed Implementation
The regulations were supposed to be published six months after the laws’ enactment, which was March 18, 2023. However, the delay was attributed to hydrocarbon-related issues, while electricity sector regulations were already in the design phase for several weeks.
Shorter Permit Validity Periods and Increased Obligations
According to QUA Consultants, a leading industry consultancy firm, the new regulations significantly reduce permit validity periods for midstream and downstream hydrocarbon activities. Automatic extensions or renewals are no longer allowed, requiring new applications for continued operations.
Previously, under the now-derogated Hydrocarbons Law Title III regulations, all permits for these activities had a 30-year validity period (except for foreign trade). The new regulations modify these terms for third-party activities, aiming to ensure “traceability across all hydrocarbon value chains,” as stated by Secretary of Energy Luz Elena Gonzalez.
- Oil-related activities: Permit validity remains at 30 years without extensions for oil processing, refining, pipeline transportation, and storage—tasks currently performed by Pemex. However, for non-pipeline transportation methods (trucks, rail, and ship), the permit duration decreases from 30 to 20 years without extensions.
- Commercialization: Permit validity is reduced to 2 years.
- Import permits: The maximum validity is now 5 years, compared to the previous regulation set by the Commerce Law through the Secretariat of Economy.
New Requirements and Greater Obligations for Permit Holders
New requirements and increased obligations are imposed on permit holders, including expanded technical and financial evaluation criteria, traceability elements, fiscal compliance features, and conditional authorizations tied to sectoral binding planning.
The evaluation criteria now consider investment levels, project lifespan, infrastructure complexity, regulatory compliance, market and regional specifics, and estimated investment return period.
Private entities engaged in these activities should analyze their current permit validity, anticipate renewals, review operational and financial conditions against new requirements, prepare documentation for potential updates or modifications, and identify any necessary adjustments in traceability and volumetric control.
The validity periods for natural gas pipeline processing, transportation, and storage remain at 30 years. However, liquefaction, regasification, compression, decompression, and non-pipeline distribution have their durations reduced to 20 years.
Next Steps
The Secretariat of Energy has 60 business days to publish Administrative General Provisions in the Official Gazette of the Federation, establishing binding sectoral planning.
Key Questions and Answers
- What are the new regulations in Mexico’s energy sector? Six new regulations were published on October 4, 2023, governing hydrocarbon industry activities. These include the Laws on Hydrocarbons, Geothermal Energy, Electric Sector, Biofuels, and Energy Planning and Transition. Existing provisions in the Hydrocarbon Income Tax Law were also reformed and repealed.
- How do the new regulations affect permit validity periods? Permit validity periods have been significantly reduced for most midstream and downstream hydrocarbon activities. Automatic extensions or renewals are no longer allowed, requiring new applications for continued operations.
- What are the new requirements and obligations for permit holders? New requirements include expanded technical and financial evaluation criteria, traceability elements, fiscal compliance features, and conditional authorizations tied to sectoral binding planning. Permit holders must analyze their current permit validity, review operational and financial conditions, prepare documentation for potential updates, and identify necessary adjustments in traceability and volumetric control.
- When will the binding sectoral planning be established? The Secretariat of Energy has 60 business days to publish the Administrative General Provisions in the Official Gazette of the Federation, establishing binding sectoral planning.
