Client Alert: Energy in Mexico: Proposed Changes to Hydrocarbons Law

On March 26, 2021, the President of Mexico presented a bill (the “Bill”) to Congress to modify the Hydrocarbons Law (Ley de Hidrocarburos) (the “HL”). By way of background, the Hydrocarbons Law is a federal law issued in 2014 as a result of the opening of Mexico’s energy sector, which governs all upstream, midstream, and downstream oil and gas activities. Under the HL, upstream activities are subject to exploration and production contracts with the National Hydrocarbons Commission (known as the CNH) or to direct awards (known as Asignaciones) to government-owned companies. Conversely, midstream and downstream activities are subject to permits issued either by the energy Ministry (SENER) or by the Energy Regulatory Commission (CRE), and it is these activities and permits that are the subject matter of the Bill. This Client Alert provides a brief summary of the Bill and offers commentary regarding its significance in the overall context of Mexico’s growing oil and gas industry.