Energy & Natural Resources
The secondary legislation to implement Mexico's overhaul of its energy sector is now in force. While amending existing statutes to comply with the new framework, the legislative package includes a number of new laws. This update covers the provisions affecting the oil and gas sector and highlights key preliminary considerations for existing market participants and those that will enter the market as a result of the overhaul.
In a historic move, in December 2013 Congress approved a bill to implement constitutional changes that will reshape the structure of the Mexican oil and gas sector. The president has now submitted to the Senate the long-awaited bill setting out the legislative package to be passed in order to implement the constitutional changes.
The Mexican national oil company (Pemex) recently submitted its requests for the so-called 'Round Zero' to the Ministry of Energy and the National Hydrocarbons Commission. Following completion of Round Zero, the government will define the areas to be released from Pemex control, which – in addition to areas not presently covered by Pemex – will be opened to bidding by private international operators.
Congress has made a historic move by breaking the government's vertically integrated monopoly over oil, gas and electricity, thereby opening the door to competition in the Mexican energy industry. Following approval by both Congress and the vast majority of state legislatures, the constitutional amendments have been promulgated and are now in effect.
The president has proposed a tax reform that will have a significant effect on the use, exploitation and consumption of natural resources, including fossil fuels and water. The president's bill proposes a carbon tax applicable to manufacturers, producers and importers of fossil fuels, as well as a new tax on the transfer of water extracted from a particular basin and consumed at another without an environmental connection.
In a historic move for the Mexican energy industry, President Enrique Peña Nieto recently submitted to Congress a bill of amendments for a major overhaul of the energy sector. The bill is the beginning of a series of changes to federal legislation in need of reform, and sets out the basis for a new perspective in the operation of both the oil and gas industry and the power sector.
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Projects & Procurement
Public-private partnership (PPP) statutes enacted by individual states have provided a legal basis for a variety of projects, but Mexico lacks an efficient PPP framework at national level. Two bills before Parliament's upper and lower houses promise a new framework for PPP projects. Among other things, the proposal before the Senate would give government agencies greater latitude in setting the terms of a contract.
White Collar Crime
A new anti-corruption law is intended to penalise individuals and companies, from Mexico or abroad, that engage in unethical behaviour in the context of government contracts in Mexico. As well as private contractors that do business with the government itself, the law will affect dealings with the government-owned oil and power companies and the agencies that award infrastructure concessions.