Mexico Energy Reform: Secondary Legislation Presented to Congress

by Morgan Lewis

Mexico’s comprehensive energy reform advances and reflects lessons from the Brazilian experience.

On April 30, the administration of President Enrique Peña Nieto presented a package of much-anticipated bills to the Mexican Congress for secondary legislation with respect to Mexico’s energy reform (the Energy Reform), which opens the door to domestic and foreign private investment in Mexico’s energy sector.[1] Private investment in the sector will occur gradually as necessary infrastructure is made available, said Pedro Joaquín Coldwell, head of the Energy Department (Secretaría de Energía). The one exception is the retail sale of gasoline, where Secretary Coldwell has confirmed that private companies will not be allowed to immediately open gas stations to compete with Petróleos Mexicanos (Pemex), Mexico’s state oil company.

The package of bills presented to Congress consists of 13 amendments to existing secondary energy legislation as well as nine new laws (the Secondary Legislation Package). Although the Secondary Legislation Package was due to be presented on April 20, its delayed delivery appears to have been the result of political frictions between the Partido Acción Nacional and the Partido Revolucionario Institucional, whose combined efforts made way for the constitutional amendments needed for the Energy Reform.

During the announcement of the Secondary Legislation Package, Secretary Coldwell highlighted the Mexican government’s goal to ensure 25% “national content” in energy projects by 2025, with the intent to grow and strengthen Mexico’s oil and gas industry. That national content will vary on a case-by-case basis and will be detailed in public bidding guidelines. Further, with respect to cross-border reservoirs and related exploration or production projects, the government announced that the private sector will be obligated to include Pemex for a minimum interest of 20%, although Pemex is not required to be the operator. Importantly, Mexico seems to have learned from Brazil’s mistakes, where the local content requirements can be as high as 55% for the development phase of the pre-salt offshore fields and where Petrobras, Brazil’s semipublic energy corporation, must be the operator of all pre-salt projects.

Secretary Coldwell also noted the following, with respect to petroleum matters:

  • The contracting arrangements contemplate profit sharing, production sharing, and licensing.
  • Awards will be made to the companies that offer the best terms for the Mexican state.
  • Contracts will not be the responsibility of any single agency in order to allow for the possibility of checks and balances.

The Energy Department will provide technical guidelines, the Treasury Department (Secretaría de Hacienda y Crédito Público) will establish the tax system, and the National Hydrocarbons Commission (Comisión Nacional de Hidrocarburos) will be responsible for procurement, processing, and contract administration.

Luis Videgaray Caso, head of the Treasury Department, noted that the Secondary Legislation Package includes two new tax laws: the Hydrocarbons Income Law (Ley de Ingresos sobre Hidrocarburos) and the Mexican Petroleum Fund for the Stabilization and Development Act (Ley del Fondo Mexicano del Petróleo para la Estabilización y el Desarrollo). In addition, amendments have been proposed to preexisting secondary tax legislation. The Secondary Legislation Package calls for variation of the fiscal burden imposed on companies depending on the contract. Secretary Videgaray indicated that there are three primary goals for the proposed tax energy reforms: (i) to promote private investment and growth; (ii) to strengthen Pemex and the Comisión Federal de Electricidad, making each a more efficient, productive, and competitive enterprise; and (iii) to guarantee an orderly fiscal transition that will allow the Mexican state to satisfy its essential obligations with respect to public investment, health, and education. Secretary Videgaray also pointed out that the proposed Secondary Legislation Package would significantly decrease Pemex’s fiscal burden from 79% to 65% on average.

It is important to note that the Secondary Legislation Package does not come without challenges as it enters a fractured and troubled Congress, and the legislation faces a certain degree of skepticism and popular opposition. These factors may delay the negotiation process and enactment of the bills included in the Secondary Legislation Package.

[1]. For more information on the Energy Reform, see our previous LawFlashes on the topic: “Mexican Government to Consider Overhaul of Energy Sector,” available here; “Reform Opens Door to Private Investment in Mexico’s Energy Sector,” available here; and “Update: Last Obstacle Cleared for Mexican Energy Reform,” available here.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morgan Lewis | Attorney Advertising

Written by:

Morgan Lewis

Morgan Lewis on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.